On Friday last week, less than three months after Fortress Investment Group bought 100 per cent of Intrawest shares and took the company off the stock market, Fortress went public.
Well, sort of. Just 8.6 per cent of Fortress, the parent company of Intrawest, which is the parent company of Whistler-Blackcomb, is now held by the public. But the initial public offering of 34.3 million shares saw the company raise $634 million. Initially offered at $18.50, the shares rose as high as $37 that first day before settling at $31.95.
In its filing, according to the New York Times, the company presented several reasons for going public, including providing capital for acquisitions and increasing employee compensation.
The Fortress IPO made headlines, at least in the U.S., because it is the first hedge fund and private equity company to go public in the United States. Hedge funds — which make up only one part of Fortress — have been known for their secrecy. U.S. Securities and Exchange Commission regulations prohibit hedge funds from engaging in advertising or any kind of general solicitation. They also restrict their investors to people with a net worth of at least $2.5 million and institutions like endowments and pension funds.
Fortress was founded in 1998 by five principal investors as a $1 billion private equity fund. It has grown to a $26 billion company that includes private equity funds, hedge funds and publicly traded vehicles called castles. The five principals control 77.7 per cent of the company, and stand to make a fair bit of profit from the IPO. Nomura Investment Managers U.S.A., a division of a Japanese bank, paid $888 million for a 13.7 per cent stake in Fortress in December. And now, slightly less than 9 per cent of the company is owned by public shareholders.
Does any of this matter to the people of Whistler? After all, from the very beginning “the mountain” has had a variety of owners, many of them based in far away places. In fact, when Franz Wilhelmsen was trying to get Garibaldi Lifts Ltd. off the ground in the early 1960s there were not enough people in the Lower Mainland willing to risk their money in the fledgling company. The whole idea of Whistler would have been dead in the water if Montreal’s Power Corp. hadn’t bought up the balance of the shares at the last minute. With controlling interest in Garibaldi Lifts Ltd., Power Corp. shuffled the company from one subsidiary to another for a number of years, before Vancouver’s Young and Barker families acquired controlling interest.