Jan. 19 (Bloomberg) -- Fortress Investment Group LLC may raise as much as $634.3 million in the first initial public offering by a U.S. manager of hedge funds and private equity.

The New York-based firm plans to sell 34.3 million shares for $16.50 to $18.50 apiece, the company said today in a filing with the U.S. Securities and Exchange Commission. Principals of the firm will control 78 percent of voting shares after the sale. Fortress said publicly traded shares would help it pay
salaries and fund acquisitions.

Proceeds will help the firm invest in infrastructure, real estate and structured debt, and to ``selectively diversify our business,'' the filing said. The sale will be watched closely by other firms eager to attract money that isn't subject to client withdrawals. Investors excluded from hedge funds because of
minimum wealth requirements will be able to buy stakes.

``Anybody who has thought about this opportunity will be pretty quick to act if the Fortress IPO is well-received,'' said Craig Asche, executive director of the Amherst, Massachusetts-based Chartered Alternative Investment Analyst Association.

In the U.S., Citadel Investment Group LLC is the only other hedge fund to test the waters of the public markets. The Chicago-based firm, controlled by Kenneth Griffin, last month sold $500 million of five-year notes, the first-ever sale of bonds by a hedge-fund manager.

Assets Double

Fortress was founded as a private-equity firm in 1998 by Wesley Edens, Robert Kauffman and Randal Nardone, who came from Swiss bank UBS AG and New York-based BlackRock Financial Management Inc. It expanded into hedge funds, real estate and debt. Assets have more than doubled since March 2005 to $29.7 billion.

Apollo, KKR

New York-based buyout firms Apollo Management LP and Kohlberg Kravis Roberts & Co. last year raised money for publicly traded funds in Amsterdam. Apollo and KKR didn't sell any shares in their management companies as Fortress is doing.

The Fortress sale is being managed by Goldman Sachs Group Inc. along with Bank of America Corp., Citigroup Inc., Deutsche Bank AG and Lehman Brothers Holdings Inc. Shares will trade under the symbol ``FIG'' on the New York Stock Exchange.