Toomre Capital Markets LLC

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Hedge Fund Manager Och-Ziff Files for IPO

On Tuesday July 2nd 2007, Och-Ziff Capital Management Group LLC, also known in the hedge fund community as OzCap, filed a registration statement for an initial public offering with the United States Securities and Exchange Commission ("S.E.C."). According to the March 2007 edition of Absolute Return in the article entitled The Billion Dollar Club, as of January 2007 Och-Ziff Capital had some $21.0 billion in assets under management ("AUM"), grew their AUM some 40% during 2006 and ranked as the seventh largest U.S. alternative asset manager.

Again according to the Absolute Return article, OzCap only trailed JPMorgan Asset Management with $34.00 billion AUM, Goldman Sachs Asset Management with $32.53 billion AUM, Bridgewater Associates with $30.2 billion AUM, D.E. Shaw Group with $26.3 billion AUM, Farallon Capital Management with $26.2 billion AUM, and Renaissance Technologies Corporation with $24.0 billion AUM, before becoming the largest United States alternative asset manager (or hedge fund management company). Was it not just seemingly yesterday that all of these firms had "just" a few (like say five) billion assets under management? It is truly amazing how quickly the size of the AUM by the largest fund managers has increased.

The preliminary S-1 statement filed on July 2nd 2007 with the S.E.C states that OzCap is headquartered in New York City with international offices in Bangalore, Hong Kong, London, and Tokyo and a professional staff of more than 300, including more than 125 investment professionals, of whom eighteen (18) are partners. An additional office in Beijing is scheduled to open later in 2007. From the 7-02-2007 S-1 document, as of April 30th 2007, OzCap managed approximately $26.8 AUM for more than 700 investors, "including many of the largest pension funds, university endowments and financial institutions". It is notable too how highly diversified the OzCap investor base is, "with no single investor accounting for more than 4% of the [firm's] assets under management as of April 30, 2007."

OzCap will be the largest United States alternative asset manager to go public to date, trailing only in the foot steps of Fortress Investment Group (Stock Symbol: FIG) and Blackstone Group (Stock Symbol: ), both of which had their respective initial public offerings earlier in 2007. Both Fortress and Blackstone had a considerable portion of their assets under management (and hence their economic profitability) dedicated to the private equity sector.

Toomre Capital Markets LLC ("TCM") believes that the OzCap percentage of private equity is lower so it shall be quite interesting to watch the marketplace decide how this "more pure play" hedge fund management company should be valued. With London-based GLG Partners (via a listed shell company merger), AQR Capital Management (via a rumored IPO) and Perry Capital (via a rumored IPO) in the process of accessing the public markets, the alternative asset manager valuation process shall be most interesting during the coming weeks and months.

Congratulations to Daniel Och, David Windreich, Michael Cohen, Zoltan Varga, Harold Kelly and the other members of the OzCap community on reaching the IPO milestone. It is hard to believe that OzCap started in 1994 with just one professional in a New York City office and now is more than 300 people with more than $26.8 billion AUM. That growth over the past thirteen years is quite an accomplishment in of itself. Again congratulations on reaching the IPO milestone!!!