Fortress has undertaken an IPO of its management company, Citadel has launched a bond and a growing number of hedge funds and alternative investment managers are listing funds in order to raise assets under management – next up is Brevan Howard.
Are investors in these securities getting a good deal? Given the relative newness of alternatives houses raising long-term capital, making valuations is more of a stab in the dark than a science.
In the case of an IPO of a management company, most would agree that the management fee would be valued at a higher multiple than the performance fee, which is lumpier and less predictable, but which accounts for most of the upside.
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