DealZone

Och-Ziff IPO drops in debut

November 14, 2007

ozm111407l.jpgOch Ziff, bless their hearts, pushed through the firm’s IPO today. Despite the naysayers, the credit crunch, the performance of its peers, the market jitters, economic worries…they went ahead and publicly floated a, yep, private investment fund–in this case, a hedge fund.

Some may think they’re crazy, others may think they’re well, what’s the word, gutsy? Or perhaps another word that ends in ‘sy’ and rhymes with Fnallsy?

The stock is down 6 percent today, hardly the market debut a company looks for. But today’s fall is to the suprise of few, and frankly, it’s safe to say that some might have expected worse.
    
After all, shares of Fortress Investment Groups and Blackstone, private investment funds that went public this year, have gotten hammered. In Fortress’ case, shares were down around 50 percent recently from its close on Day 1. 
    
So is Danny Och, the young, curly haired, dashing leader of the hedge fund crazy? Perhaps.

But another interpretation is that, to his firm’s credit, the point is to be a publicly traded hedge fund, period. In Och’s case, that means earning a big payout from the shares, but also having a permanent base of publicly traded capital, something that a lot of the hedge funds and private equity firms want.

So instead of yanking the IPO when things didn’t look good, it forged ahead. Certainly, it’s a bruise to the ego when your opening day on the market ends down 6 percent. There probably wasn’t a heck of a lot of champagne popping for the Och Ziff folks.

Then again, maybe there was. Completing an IPO is no easy task. Blackstone President and COO Tony James told Reuters that his firm’s IPO was one of the hardest deals he’s ever been involved with.

Now the question is, will KKR follow Och Ziff? KKR has yet to price its IPO, after filing its S-1 in July. Can Henry Kravis and George Roberts handle the prospect of seeing shares of the firm drop on its opening day? The market will have to wait and see.

(Image: Och-Ziff Capital Management Group visits the NYSE to celebrate its intial public offering. www.nyse.com)

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