Daniel Och, the former Goldman Sachs trader, will make a paper profit of about $4 billion (£2 billion) when Och-Ziff, the hedge fund manager that he founded 13 years ago, floats in New York in September.

The hedge fund, which last month backed Archie Norman’s purchase of HSS, the tool hire business, will become the latest in a flurry of investment firms to list in America, after filing to raise $2 billion from an initial public offering in New York.

Och-Ziff, which also backed Malcolm Glazer’s takeover of Manchester United, as well as the buyout of Peacocks, the fashion retailer, was set up in 1994 by Mr Och, with funding by the Ziff publishing dynasty.

Mr Och is thought to own about a quarter of Och-Ziff, which will raise about $2 billion by selling between 10 per cent and 15 per cent in the IPO. This will value the company at about $16 billion.

The Ziff brothers, whose father helped to build the Ziff-Davis publishing empire on the back of titles such as PC Magazine and Boating, own about 10 per cent. The empire was sold for $1.4 billion in 1994 after the father retired and the brothers ploughed much of the money into hedge funds such as Och-Ziff.

The flotation, which is being managed by Lehman Brothers and Goldman Sachs, will see Och-Ziff follow Fortress Investment, Black-stone and GLG on to the New York Stock Exchange as their founders seek to capitalise on the dramatic growth of private equity and hedge fund investing.

The proceeds from the IPO of Och-Ziff’s management company – as opposed to the $26.8 billion of investment funds that it manages on behalf of 700 investors – will be shared between the hedge fund’s 18 partners and the Ziff family. They will be required to reinvest their gains in Och-Ziff’s funds for at least the next four years.

Mr Och worked at Goldman Sachs for 12 years, first as a risk arbitrageur and later as a co-head of US equity trading in New York.

The float comes as private equity and hedge firms enjoy a golden period in which they are investing record quantities of capital, leveraged highly with very cheap debt. Yet fears are mounting that the golden period could be nearing an end, as plunging valuations of bonds backed by high-risk sub-prime mortgages have made lenders more cautious. Private equity and hedge funds are expected to find it increasingly difficult and more expensive to borrow large sums of money, which will reduce the returns that they make on their investments.

At the same time, two leading members of the Senate Finance Committee proposed new legislation last month that would increase the tax that publicly traded private equity and hedge funds pay on their profits from 15 per cent to 35 per cent.

Och-Ziff, based in New York, is increasingly providing debt and equity to private equity-style transactions and investing in property, but the bulk of its revenues still come from traditional hedge fund activities, such as merger arbitrage.

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