Since the story of private equity firm The Blackstone Group's potential initial public offering has been out only a couple hours, it is still very much developing. With so few details out, the implications are as yet unknown. Here is Tom Taulli's earlier piece on the subject.

From CNBC's Faber (you can watch the video here, partial transcript's here) we know that the Goldman Sachs Group Inc. (NYSE:GS) and Blackstone attorneys are preparing a prospectus. Preparing is one thing and filing is another, and yet Faber is quite adamant in his belief Blackstone will file within two weeks or by the end of March. Also, the decision to go public rests on Chairman and Chief Executive Stephen Schwarzman. Once again, an adamant Faber says "the decision has been all but made."

While Faber said that Blackstone's market value could be easily in excess of $20 billion according to bankers, MarketWatch points out that it isn't clear yet what kind of an IPO this would be. The shares could represent

CNBC's deal reporter David Faber who got the scoop on the TXU Corp. (NYSE: TXU) buyout has another big one. Apparently, the big-time private equity firm, The Blackstone Group, is planning to file for an IPO within the next couple weeks.

Funny enough, Blackstone's CEO, Stephen Schwarzman, has indicated -- on many indications -- that an IPO was not in the cards. Why deal with all the hassles? Well, I guess Schwarzman could not ignore the huge $10.4 billion IPO of Fortress Investment Group (NYSE: FIG).

Faber thinks a Blackstone offering could fetch a valuation at least twice that. It's stunning considering that it was in 1985 that Schwarzman, who owns about 40% of Blackstone, invested $200,000 to start the company. How about that for an ROI?

I think it's a good bet that other premier private equity firms are preparing for IPOs. Yes, things are going to get very interesting – very soon.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Investors in Rail America, (formerly NYSE:RRA), got a Valentine's Day present in the form of a buyout offer of $16.35 for each share of Rail America stock owned. Rail America is a short-line rail service provider operating 42 railroads over 7,800 miles of track, primarily in the United States, but also operating in Canada and, until recently, in Australia. Rail America was bought by several private equity funds managed by affiliates of Fortress Investment Group LLC (NYSE:FIG). Over 74% of shares held voted in favor of the acquisition. Fortress Investment Group began trading on the NYSE on 9 February 2007. Its IPO began at $18.50 per share. FIG stock closed on Friday, 2 March 2007, at $27.75.

With over $1.2 billion in assets, Rail America was an attractive buy for Fortress Investment Group. No one commodity comprises more than 16% of Rail America's shipping business. It interchanges with several Class I railroads throughout the country and has one of the strongest safety records in the rail transportation industry. Rail America is poised to grow in terms of carload volume but needed access to more funds to do so. With over $30 billion in assets under management, Fortress Investment Group can provide that access. As part of the buyout, Rail America CEO Charles Swinburn will retire. He will be replaced by John E. Giles, who brings 35 years of experience in railroads and the transportation industry to the CEO suite.

It's not often that the principals of a firm have a big-time cash-out before an IPO.

But, this is what happened with the Fortress Investment Group (NYSE: FIG) IPO.

How much? It's about $409.2 million. The break-down (which come from the IPO filing with the SEC):

• Peter Briger - $98.1M
• Wesley Edens - $95.1M
• Robert Kauffman - $63.8M
• Randal Nardone - $59.4M
• Michael Novogratz - $92.8M

Oh, and these guys also had large distributions during 2006. They include:

• Peter Briger - $97.2M
• Wesley Edens - $109.2M
• Robert Kauffman - $66.4M
• Randal Nardone - $69.7M
• Michael Novogratz - $104.4M

Kind of makes the former CEO of Home Depot Inc. (NYSE: HD), Robert Nardelli, look like a piker. He only got $210 million for six year's of work.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Founded in 1998, Fortress Investment Group (NYSE: FIG) has quickly become a big force in alternative investments – such as private equity and hedge funds. The firm's team has posted standout investment results.

It's a very profitable business, with net income of $192.7 million in 2005.

However, for the most part, top-notch alternative investment firms are private (only available to the wealthy and institutions). So, why go public?

After all, a public company is subject to rigorous disclosure requirements. There is also the substantial potential liability of Sarbanes-Oxley.

Well, in Fortress's SEC filing, the company does provide some reasons:

People: The alternative investment business is a intellectual capital business. That means, you need very smart investment pros.

It canbe tough to attract such talent. By having public stock, it is easier to structure improved compensation packages (ie, by offering stock options and other equity grants).

Permanence: Every three to four years, a fund must do a capital raise. This is time-consuming and is distracting.

By accessing capital from the public, Fortress now has a permanent source of funding. Interestingly enough, this is essentially what Warren Buffett has done with Berkshire Hathaway (NYSE: BRK).

Currency: Fortress can use its stock as a way to buy other funds. It's a source of leverage.

Oh, and of course, a public offering can make the main shareholders very rich. This is certainly the case at Fortress, where several of its principals are now billionaires.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Today's news contains two stories that highlight our barbell economy -- wealth is accelerating at the extreme top end and the less fortunate are in worse shape as they fall behind on their debt payments. Meanwhile the middle class is treading water. The barbell depicts this swelling at the extremes.

According to Bloomberg, today's oversubscribed Initial Public Offering (IPO) of Fortress Investment Group (NYSE: FIG) gives Fortress's five principals control of $7.4 billion. Meanwhile, as reported in TheStreet.com, the subprime mortgage market meltdown continues.

Earlier this week, I posted some evidence of the swelling of extreme wealth. And with the savings rate at lows not seen since 1933, -0.7%, people at the low end are really hurting. And those at the bottom are getting by on debt to a greater extent than the wealthy. Specifically, the top 1% of householders hold 30% of the assets and 7% of the debt, while the bottom 50% hold a mere 6% of assets but a disproportionate 24% of the debt.

For those who hold subprime mortgages, the impact of their default on the middle and extreme wealthy classes is significant for three reasons:

• Subprime is very heavily indebted -- just as the housing cycle is turning down. Loan-to-value ratios have risen from about 78% in 2000 to 86% today.
• Subprime is more exposed to borrowers who misrepresent their income to get a loan. Low-documented loans have doubled to 42% of subprime loans over the last six years.
• Creative loans -- non-interest paying, option ARMs, etc. -- represented nearly 50% of all loans made over the last 12 months. In 2000 these loans represented less than 2% of total mortgage loans.

Since institutions buy the securities backed by the subprime mortgages, it remains to be seen whether the extremely wealthy will emerge unscathed from the woes of the overextended.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches Management at Babson College and edits The Cohan Letter.

Wall Street's equity market maintains full-power boosters next week, with no less than 14 IPOs on the docket.

LM = The firm(s) lead managing the deal.
PD = The day of the week the deal is expected to price.

Those deals tentatively scheduled to price include:

IPOs:

Accuray (ARAY), a 13.3M-share IPO for this robotic radio-surgery device manufacturer. ARAY has $14.00-$16.00 filing range. LM: JP Morgan Chase & UBS Bank. PD: Thursday.

Cellcom Israel (CEL), an 18.975M-share IPO for this Israel-based cell phone service provider. CEL has a $16.00-$18.00 filing range. LM: Goldman Sachs, Citigroup, & Deutsche Bank. PD: Tuesday.

Fortress Investment Group (FIG), 34.3M-share IPO for this hedge fund. FIG has a $16.50-$18.50 filing range. LM: Goldman Sachs. PD: Friday.

JA Solar (JASO), a 15M-share IPO for this China-based solar cells manufacturer. JASO has a $12.50-$14.50 filing range. LM: CIBC World Markets & Piper Jaffrey. PD: Wednesday.

Mellanox Technologies (MLNX), a 6M-share IPO for this semiconductor manufacturer. MLNX has a $12.00-$14.00 filing range. LM: Credit Suisse & JP Morgan Chase. PD: Thursday.

The much anticipated IPO of Fortress Investment Group -- a mega hedge fund and private equity firm -- now has a price range: $16.50-$18.50. With 34.29 million shares to be issued, it could mean a capital raise of $750 million.

Key employees will still have 77.7% voting control of the company.

Fortress is certainly doing well. As of the first three quarters of 2006, net income surged from $32.7 million to $158.7 million. The company manages close to $30 billion.

Generally, it's mostly institutions and wealthy individuals that can participate in hedge funds. But, now with the Fortress IPO, just about anyone can get a piece of the action.

The proposed ticker symbol is FIG and the IPO filing is at the SEC web site.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

The biggest securities firm in Japan, Nomura Holdings, NYSE:NMR) is getting bigger. The company recently snagged Instinet, which is an electronic exchange (yes, a pretty hot space).

Now, the company is going to shell out $888 million for a 15% stake in Fortress Investment Group, which is a mega player in hedge funds and private equity. Basically, it looks like Nomura is trying to build a powerhouse like Goldman Sachs.

In fact, Fortress is in the process of going public. Thus, the Nomura's investment provides a valuation benchmark on the upcoming deal (about $5.9 billion).

The deal is also strategic, allowing Fortress to move into the lucrative Asian markets. In other words, it could be a nice boost for the IPO.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates DealProfiles.com.