Och-Ziff is preparing to raise up to $1.2 billion (£590 million) from its initial public offering after the US hedge fund manager filed with the Securities and Exchange Commission to sell as many as 36 million shares at between $30 and $33 each.

The firm’s decision to push the button on the IPO, while aiming well below the $2 billion in proceeds previously targeted, suggests that Och Ziff believes that the worst of the credit crunch is over, but remains cautious about investor demand for its shares.

If the flotation is successful it may prompt other investment firms, such as KKR, to carry out proposed floats.

The Och-Ziff IPO would end a hiatus in investment firm flotations over the summer as concerns about tax increases and the availability of cheap credit hit the share price of floated private equity firms, such as Blackstone.

KKR, which said in July that it would go public, amended its IPO filing a month later noting that financing costs had “increased dramatically”. The flotation of Och-Ziff will value the hedge fund at about $14 billion and give a paper profit of more than $3 billion to its founder, Daniel Och, the former Goldman Sachs trader.

The New York hedge fund in June backed Archie Norman’s purchase of HSS, the tool hire business, and has also financed the takeover of Manchester United and the buyout of Peacocks, the fashion retailer.

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

He set up the firm in 1994 with funding from the Ziff publishing dynasty. The Ziff brothers, whose father helped to build the Ziff-David publishing empire on the back of titles such as PC Magazine, own about 10 per cent. The publisher was sold for $1.4 billion in 1994 and much of the money was ploughed into hedge funds such as Och-Ziff.

For the six months to June 30, Och Ziff increased its profits to $199.4 million, from $81.4 million in the first half of 2006. The group increased its revenues from $457.9 million to $584.8 million over the same period.

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