Ahead of IPO, Fortress 'Uncovers' $4 Billion In New Assets

by: Greg Newton

Nice catch by Financial News this morning from the Fortress IPO documents: apparently, its assets at Sep. 30 2006 increased from $26 billion – when the original IPO document was released last November – to $29.7 billion, according to a filing on Friday, Jan 19. Oooops. And the source of the discrepancy:

“…its private equity funds division which is now said to hold about $17.3 billion of assets…In the November filing, Fortress stated it had $13 billion in investments.”

No, Fortress didn’t misplace anything, or do anything that would call its internal controls in question. From here in the peanut gallery, it looks like some discerning eye realized that the private equity part of the business was undervalued by 33 percent or so and, just like that, fixed it. Or the first number was a typo. Or something. Magic the way that happens, and it happens all the time in the wonderful world of private equity.

Prospective investors can, of course, be assured that the new, 33 percent higher, valuations probably carry the footprints imprimatur of at least some of the entirely unconflicted cabal of Goldman Sachs, Banc of America Securities, Citigroup, Deutsche Bank and Lehman Brothers, which will share the tiresome chore of flogging up to almost 40 million shares at $16.50-$18.50 a piece… although don’t call me surprised if that gets tickled north, and possibly well north, of $20 by the time the punters put their money down.

For who knows how many more valuation surprises lie in wait?  Surely, if a 33 percent mark-up in barely two months is appropriate, we can expect plenty more where that came from, no? 

Fortress ‘discovers’ $4bn of assets ahead of IPO
by James Mawson
Financial News Jan. 22 2007