Hedge Fund Och-Ziff Pushes Through Its IPO

Nov.15.07 | About: Och-Ziff Capital (OZM)

As the saying goes on Wall Street:  “You’re only as good as your last deal.”

Well, in the case of alternative investment manager IPOs, the track record has been spotty, as seen with the offerings of Fortress Investment Group (NYSE: FIG) and Blackstone (NYSE: BX).

As a result, the IPO of Och-Ziff (NYSE: OZM) certainly faced a good amount of turbulence.  There was even talk that the IPO may not even happen.

But on Wednesday Och-Ziff was able to raise $1.15 billion in its offering (there was also a $1.15 billion infusion from Dubai International Capital, which is a mega sovereign fund).  Actually, this deal counts as one of the largest IPOs for the year.

Och-Ziff has a global hedge fund operation, which Daniel Och founded in 1994.  He was a former super trader at Goldman Sachs (NYSE: GS), where he met some rich people.  In fact, he was able to bring along the Ziff family for support.

The investment strategy was to allow for strong risk-free returns (hey, when your rich, you want to preserve things, right?)  And, it’s worked quite well.

And revenues have been growing.  For the first nine months of 2007, revenues were $731.8 million, up from $661.5 million in the same period a year ago.  Assets under management are about $30 billion or so.

What to do with its windfall?  Och-Ziff plans to expand its global footprint – which may involve some acquisitions.  In light of the recent instability, there are likely to be some opportunities for dealmaking.

The underwriters on the deal include Goldman Sachs and Lehman Brothers (NYSE: LEH).