Fortress Transportation and Infrastructure Investors LLC, an investment fund managed by Fortress Investment Group, fell in its trading debut after raising $340 million in an initial public offering.
The fund, whose holdings range from aircraft to a Gulf Coast oil transportation and storage terminal, dropped 3 percent to $16.46 as of 9:54 a.m. in New York, after the IPO was priced at $17. The shares are listed on the New York Stock Exchange under the symbol FTAI.
The fund reflects private equity’s push to create permanent investing pools that don’t have to wind down and return investors’ capital after a decade, as traditional buyout funds do. Fortress, a New York-based asset manager with $70 billion of capital, has raised more than $5 billion for six publicly traded investment vehicles since 2011, including real estate investment trusts and a community newspaper group.
Wes Edens, a Fortress co-founder who heads its buyout unit, said in an interview with Bloomberg last October that permanent capital vehicles represent the future of the industry.
“We are ahead of the crowd” in developing them, he said.
The infrastructure fund going public began in June 2011 as a private fund called Fortress Worldwide Transportation and Infrastructure Investors LP, which received $395 million in initial commitments. Fortress got an additional $600 million last year after reopening the fund, regulatory filings show.
The fund and some Fortress affiliates paid $422 million last July for Jefferson Gulf Coast Energy Partners LLC, whose assets include a Texas shale-oil terminal and 300 rail cars it leases to crude-oil shippers and nearby refineries. That is its biggest investment to date. The fund said the IPO will increase available cash for future investments to about $600 million.
The annual internal rate of return for the fund’s assets from inception through December averaged 18 percent before expenses and fees, according to filings.
Major backers of the fund before the IPO included the Washington and Oregon state retirement plans and Dow Chemical Co.’s pension fund, according to data compiled by Bloomberg.
Citigroup Inc., Bank of America Corp. and Barclays Plc managed the offering.