We have written in the past on the seeming historical inevitability that private equity and hedge funds would make wider use of the public markets to help ensure a permanent pool of capital in addition to cementing the legacy of the founders of these organizations. It now seems the day when a domestic hedge fund operation going public is nigh.

Jenny Anderson in the New York Times is reporting that Fortress Investment Group is considering an initial public offering in the that values the firm in the $5-$7 billion range. This type of transaction would serve a number of purposes.

If it should go ahead, a Fortress offering would be the first public listing of its kind. A successful offering could pave the way for a stampede of interest from other seasoned hedge funds as well as private equity giants that might be looking for ways to turn their huge hoards of private money into public asset-management companies.

Such a move would go against the grain: companies seem more likely to go private rather than public. But for Fortress, going public would give it another way to raise money to build the business as well as a tool — its shares — to retain talent. Stock would also give Fortress a currency to buy other companies. And it would allow the founders to cash out some of what they have built and create a succession plan.

The excellent article goes on to explore the precedents behind the transaction including more information on the nature of Fortress itself. The bottom line is that the world for hedge funds is changing, and changing fast. CNNMoney.com weighs in with a short piece on the pluses and minuses of a publicly traded hedge fund operation.

Roger Ehrenberg at Information Arbitrage has also been following the changing nature of the alternative investment universe with some interest. The fact that a deal is happening is not all that surprising given that Roger believed this was “simply inevitable.” The only question now is whether Fortress is the first of many more large hedge fund operation to come public.

We are not feigning false modesty when we say that it did not take a rocket scientist to see this one coming. The signs were out there for all to see. The only question was who would come public and when. The prospect of a number of hedge funds coming public will present a unique opportunity down the road when individual investors, or an enterprising ETF sponsor, can form a portfolio of hedge fund operators.