Fortress Seeks More Than $1 Billion for Its Second Lending Fund
Fortress Seeks More Than $1 Billion for Its Second Lending Fund
(Bloomberg) -- Fortress Investment Group LLC is seeking more than $1 billion for its second lending fund, according to people with knowledge of the matter.
The New York-based firm has discussed the vehicle, known as Fortress Lending Fund II LP, with prospective investors and is targeting an accelerated fundraising, meaning it could stop accepting new capital by the fall, said the people, who asked not to be identified because the talks are private. It plans to deliver an annualized return of 12% to 15% before fees, one of the people said.
A spokesman for Fortress declined to comment.
The fund will focus on originating and purchasing senior secured loans across various sectors, said the people. It can participate in direct and broadly syndicated deals, as well as in specialty finance, commercial real estate and litigation-finance transactions, they said. The four co-chief investment officers of Fortress’s lending effort are Drew McKnight, Joshua Pack, Dominick Ruggiero and Aaron Blanchette.
Since 2006, Fortress has plowed some $60 billion into lending initiatives, generating an annualized internal rate of return of 15.4% before fees, said one of the people. Roughly $6 billion of that total has been in distressed or troubled assets, from which Fortress’s recovery rate is 104 cents on the dollar, the people said.
The firm’s $1.9 billion debut lending fund is set to be fully invested in coming months, one of the people said. Its bets include positions in the first-lien and second-lien debt that was attached to taking apparel firm Perry Ellis private in 2018. Since mid-March, it has backed more than 35 issuers of new syndicated loans, and expects to generate a 12% gross IRR as of March 31, including coronavirus-related adjustments, the person said.
Like many alternative-asset managers, SoftBank Group Corp.-backed Fortress is seeking to raise new pools of capital to invest in markets that have been dislocated by the pandemic. The firm is separately seeking at least $3 billion for a credit opportunities fund, Bloomberg reported last month.
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