Leonard M. Tannenbaum, the founder and chief executive officer of Fifth Street Asset Management Inc., will become one of the world’s youngest billionaires if the company prices its initial public offering at the top of its range.
Fifth Street, an alternative asset manager with $5.6 billion under management, is looking to sell 8 million shares for as much as $26 each when it debuts on the Nasdaq, which would value Tannenbaum’s stake in the company at about $1 billion. The 43-year-old billionaire was paid $22.5 million in cash compensation in 2013 and has never appeared on an international wealth ranking.
Fifth Street has been on a roll recently, which is why Mergers & Acquisitions named it the 2013 winner of the M&A Mid-Market Award for Lender of the Year. In 2013, the lender doubled deal value, took a second business development company (BDC) public, bought another lender, started a venture lending operation and an aircraft leasing operation, and added new offices.
“It’s a matter of seizing the moment,” said Merrill Ross, an analyst with Wunderlich Securities Inc., who has a “buy” rating on one of Fifth Street’s publicly traded business development companies. “They can raise these pools of money and prosperously manage them to expand their footprint.”
Tannenbaum founded the company, which provides financing to companies with annual revenues between $25 and $500 million, in 1998. It partners with private-equity sponsors to fund its customers. David Einhorn’s hedge fund, Greenlight Capital Inc., is invested in one of Fifth Street’s publicly-traded business development companies. Tannenbaum is a director with Einhorn at Greenlight Masters LLC, a Greenlight Capital-affiliated fund of funds with $930 million in assets, according to filings.
Nick Rust, a spokesman for Tannenbaum at Prosek Partners, said the billionaire declined to comment, citing the public offering quiet period.
The company paid dividends of about $100 million to holders of membership interests beginning in 2012, according to its prospectus. Tannenbaum won’t sell any shares in the offering.
About 95 percent of Fifth Street’s assets are held in two publicly-traded business development companies -- Fifth Street Finance Corp. and Fifth Street Senior Floating Rate Corp. -- according to the prospectus. Tannenbaum and other Fifth Street executives own small stakes in these companies.
Entities controlled by Tannenbaum own Fifth Street’s headquarters in Greenwich, Connecticut, according to the filing. He collects $2 million in annual rent from the firm.
Tannenbaum holds an undergraduate degree in economics and a masters in finance from the Wharton School at the University of Pennsylvania.
Tannenbaum has a passion for politics and in 2012 founded a political action committee (PAC) called "Keeping America Competitive," which he describes as “pro-business and bi-partisan.”
For more, watch Mergers & Acquisitions’ video with Tannenbaum about the PAC.