Fortress grows assets as it weathers hedge fund woes
Fortress Investment Group, the private equity and hedge fund manager, has garnered more than one fifth of the $20bn (€13bn) it seeks to take advantage of credit-crunch opportunities on the back of a $69m loss.
Lower returns across Fortress’ hedge funds, which account for over 50% of its revenues, coupled with expenses tied to its initial public offering in February last year contributed to the loss.
In comparison, Fortress had a net income of $62.1m for the first quarter of 2007.
Industrywide in the first quarter of this year, net inflows for hedge funds fell to a record low of $16.5bn, according to Hedge Fund Research.
Fortress increased its assets under management 55% to $34.2bn over the first quarter last year.
The increase in assets boosted the Fortress management fees 48% to $145m. Revenues, which include management fees, incentive income derived from fund performance and investment income, halved to $200m in the first three months of 2008.
Private equity funds assets rose 55% to $13bn over the same period last year.
Assets for its liquid hedge fund business, which invests in global macro opportunities, rose 56% to $9.3bn for the quarter compared with the first three months of 2007.
Its hybrid hedge fund business, which includes a special opportunities fund and a partner fund targeting distressed investments and funds of hedge funds, was particularly hard hit with a 1.8% decline in performance in the first quarter.
Fortress chief executive Wes Edens said the funds improved returns in April. An open-ended commodities hedge fund started in January has raised $800m to date.
Edens' optimism about opportunities brought about by the credit crunch was underlined by its fundraising goal of $15bn to $20bn for the year. The target is considerably larger than its previous efforts, which have generated an average of $11bn annually.
The alternative asset manager has scored $4.4bn for its funds to date, including $2.6bn in the first quarter of the year across its businesses.
The fund manager also announced it has launched a sixth private equity fund that is expected to raise more than its fifth fund, which brought in $5bn by the time it closed earlier this year.
Fortress also launched two private equity funds focused on investments in residential mortgage-backed securities.
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