Fortress Investment Group
Encyclopedia
Fortress Investment Group LLC is an investment management
firm based in New York
, New York
. The company went public on February 9, 2007.
; Robert Kauffman, a managing director of UBS
; and Randal A. Nardone, also a managing director of UBS. Fortress quickly expanded into hedge funds, real estate-related investments and debt securities, run by Michael Novogratz and Pete Briger, both former partners at Goldman Sachs
. In a video interview, Novogratz discusses in detail the growth of Fortress and the keys to developing Global Macro Funds.
Fortress Investment Group's investments grew rapidly, with its private equity funds netting 39.7% between 1999 and 2006.
As of June 30, 2010, Fortress Investment Group had four core businesses totaling approximately $41.7 billion of assets under management: Private Equity, Credit, Liquid Markets and Traditional Asset Management (Logan Circle Partners was acquired in April 2010).
ski resort operator Intrawest
. Intrawest is North America's largest operator of ski resorts and also operates luxury adventure travel brands, including Abercrombie & Kent
.
On November 15, 2006, RailAmerica Inc.
announced that a Fortress-managed Fund would acquire the company, offering $16.35 per share (a 32% premium). The transaction was completed in February 2007. Fortress later sold RailAmerica via initial public offering
in October 2009.
On May 8, 2007, Florida East Coast Industries (FECI), parent company of Florida East Coast Railroad, announced that following a unanimous vote of the FECI Board of Directors, a Fortress-managed Fund would acquire FECI in a transaction valued at $
3.5 billion.
The Surface Transportation Board
approved the transaction in September 2007. Although RailAmerica operated FEC for a time, the two were never merged, and after the RailAmerica IPO Fortress retained FEC (and still does).
On June 15, 2007 Fortress announced it would partner with Centerbridge Partners
to acquire Penn National Gaming
, an operator of casino
s and horse racing
venues, for $6.1 billion. Penn National shareholders were to receive $67 cash for each share. It was announced on July 3, 2008, that Fortress had backed away from the agreement amid weakness in the economy and financial markets. Under the termination agreement, Penn National receives $1.475 billion, consisting of a break-up fee of $225 million and an interest-free $1.25 billion loan from Fortress, Centerbridge, Wachovia and Deutsche Bank. Fortress Co-Chairman Wesley Edens assumes a seat on the board of Penn National as part of the agreement.
Fortress has taken several of its portfolio companies public such as Aircastle Ltd.
, Brookdale Senior Living Inc., GAGFAH and RailAmerica, Inc.
Fortress has said it lost $125 million purchasing fraudulent promissory notes from fraudster Marc Drier who was operating a Ponzi scheme. Fortress has filed a lawsuit against lawfirm Dechert in an attempt to recover the loss. The lawsuit was filed in New York state court, alleging Dechert issued a "false" legal opinion letter that Mr. Dreier used to defraud Fortress.
, candidate for the 2008 Democratic Party
nomination for president, and the 2004 nominee for vice president, $479,512 for his consulting services, a part-time job. http://apnews1.iwon.com//article/20070517/D8P5SG100.html The November 19, 2007 edition of the Wall Street Journal reported Edwards had invested $16 Million in Fortress.
Also in 2006, Fortress acquired Intrawest in a leveraged buyout
. Three weeks before the opening of the 2010 Olympics, Fortress failed to make payment on its loan used to buy out Intrawest. This caused its creditors to force Intrawest to divest itself of several of its resort holdings in 2009 and 2010 which includes Whistler Blackcomb, in order to reduce its debt load.
Fortress loaned the controversial animal testing company Huntingdon Life Sciences
around $70 million in 2006. This was later discovered by the animal rights group SHAC, which exists to pressurise and close HLS. In 2011 Fortress dropped all ties with HLS.http://www.shac.net/news/2011/july/10.html
Fortress Investment Group has backed a German patent holding firm IPCom GmbH & Co. KG. This firm is now suing Nokia for patent infringement for $17.77 billion.
Fortress Investment Group was the primary lender to Millennium Development Group for building the $875 million (CAD) athlete's village for the 2010 Winter Olympics
in Vancouver, British Columbia. Financial instability in September 2008 saw Fortress Investment Group reportedly at the brink of bankruptcy. Consequently, Fortress was unable to provide further financing to Millennium forcing the City of Vancouver to pay approximately $450 million (CAD) to complete the project in time for the Winter Olympic Games.http://www.theglobeandmail.com/servlet/story/RTGAM.20090112.wvanoc0112/BNStory/National/home. The village was completed in November 2009 and may yet realize its potential after the Olympics. http://www.nytimes.com/2010/01/15/greathomesanddestinations/15iht-revill.html
The City of Vancouver applied for and received legislative approval from the Province of BC to borrow as much money as required to enable the project to complete. http://www.cbc.ca/canada/british-columbia/story/2009/01/18/olympic-funding.html?ref=rss Anti-Olympic groups have spoken out against the legislative change because they believe that Fortress Investment will remain the owner of the village after the 2010 Winter Olympics.http://www.cbc.ca/canada/british-columbia/story/2009/01/18/olympic-funding.html?ref=rss
Fortress and its principals were featured in an April 2009 Vanity Fair
article on the adverse economic conditions facing hedge funds.
Investment management
Investment management is the professional management of various securities and assets in order to meet specified investment goals for the benefit of the investors...
firm based in New York
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
, New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
. The company went public on February 9, 2007.
History
Fortress Investment Group LLC was founded as a private equity firm in 1998 by Wesley R. Edens, a former partner at BlackRock Financial Management, Inc.BlackRock
BlackRock, Inc. is an American multinational investment management corporation and the world's largest asset manager. BlackRock is headquartered in Manhattan, New York City, New York, United States and is the leading provider of investment, advisory, and risk management solutions...
; Robert Kauffman, a managing director of UBS
UBS AG
UBS AG is a Swiss global financial services company headquartered in Basel and Zürich, Switzerland, which provides investment banking, asset management, and wealth management services for private, corporate, and institutional clients worldwide, as well as retail clients in Switzerland...
; and Randal A. Nardone, also a managing director of UBS. Fortress quickly expanded into hedge funds, real estate-related investments and debt securities, run by Michael Novogratz and Pete Briger, both former partners at Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
. In a video interview, Novogratz discusses in detail the growth of Fortress and the keys to developing Global Macro Funds.
Fortress Investment Group's investments grew rapidly, with its private equity funds netting 39.7% between 1999 and 2006.
As of June 30, 2010, Fortress Investment Group had four core businesses totaling approximately $41.7 billion of assets under management: Private Equity, Credit, Liquid Markets and Traditional Asset Management (Logan Circle Partners was acquired in April 2010).
Portfolio companies
In 2006, Fortress-managed Funds acquired CanadianCanada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
ski resort operator Intrawest
Intrawest
Intrawest ULC is a developer and operator of destination resorts and a luxury adventure travel company. The company was founded in 1976 as a privately funded real estate development company...
. Intrawest is North America's largest operator of ski resorts and also operates luxury adventure travel brands, including Abercrombie & Kent
Abercrombie & Kent
-History:Abercrombie & Kent began in East Africa, where Geoffrey Kent was born while his parents, Valerie and Colonel John Kent, were on safari. Though British by birth, the Kents were drawn to the freedom and beauty of life in Africa, qualities that made a powerful impression on Geoffrey, who...
.
On November 15, 2006, RailAmerica Inc.
RailAmerica
RailAmerica, Inc., based in Jacksonville, Florida, is a holding company of a number of short-line railroads and regional railroads in the United States and Canada....
announced that a Fortress-managed Fund would acquire the company, offering $16.35 per share (a 32% premium). The transaction was completed in February 2007. Fortress later sold RailAmerica via initial public offering
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
in October 2009.
On May 8, 2007, Florida East Coast Industries (FECI), parent company of Florida East Coast Railroad, announced that following a unanimous vote of the FECI Board of Directors, a Fortress-managed Fund would acquire FECI in a transaction valued at $
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
3.5 billion.
The Surface Transportation Board
Surface Transportation Board
The Surface Transportation Board of the United States is a bipartisan, decisionally-independent adjudicatory body organizationally housed within the U.S. Department of Transportation. The STB was established in 1996 to assume some of the regulatory functions that had been administered by the...
approved the transaction in September 2007. Although RailAmerica operated FEC for a time, the two were never merged, and after the RailAmerica IPO Fortress retained FEC (and still does).
On June 15, 2007 Fortress announced it would partner with Centerbridge Partners
Centerbridge Partners
Centerbridge Partners is a private equity investment firm focused on leveraged buyouts and distressed securities.The firm manages in excess of $5.5 billion of investor commitments and is based in New York City with an additional office in London, UK....
to acquire Penn National Gaming
Penn National Gaming
Penn National Gaming, Inc. is a diversified owner and operator of casino properties, as well as horse racetracks and associated off-track betting facilities primarily in the United States...
, an operator of casino
Casino
In modern English, a casino is a facility which houses and accommodates certain types of gambling activities. Casinos are most commonly built near or combined with hotels, restaurants, retail shopping, cruise ships or other tourist attractions...
s and horse racing
Horse racing
Horse racing is an equestrian sport that has a long history. Archaeological records indicate that horse racing occurred in ancient Babylon, Syria, and Egypt. Both chariot and mounted horse racing were events in the ancient Greek Olympics by 648 BC...
venues, for $6.1 billion. Penn National shareholders were to receive $67 cash for each share. It was announced on July 3, 2008, that Fortress had backed away from the agreement amid weakness in the economy and financial markets. Under the termination agreement, Penn National receives $1.475 billion, consisting of a break-up fee of $225 million and an interest-free $1.25 billion loan from Fortress, Centerbridge, Wachovia and Deutsche Bank. Fortress Co-Chairman Wesley Edens assumes a seat on the board of Penn National as part of the agreement.
Fortress has taken several of its portfolio companies public such as Aircastle Ltd.
Aircastle
Aircastle Limited is a company engaged in Commercial Aircraft Sales and Leasing.It has its headquarters in Stamford, Connecticut, USA, with offices in Dublin and Singapore. Aircastle was established in early 2005 and now owns about 133 jet airliners, both narrow-body and wide-body types, which are...
, Brookdale Senior Living Inc., GAGFAH and RailAmerica, Inc.
Fortress has said it lost $125 million purchasing fraudulent promissory notes from fraudster Marc Drier who was operating a Ponzi scheme. Fortress has filed a lawsuit against lawfirm Dechert in an attempt to recover the loss. The lawsuit was filed in New York state court, alleging Dechert issued a "false" legal opinion letter that Mr. Dreier used to defraud Fortress.
Controversies
In 2006, Fortress paid Sen. John EdwardsJohn Edwards
Johnny Reid "John" Edwards is an American politician, who served as a U.S. Senator from North Carolina. He was the Democratic nominee for Vice President in 2004, and was a candidate for the Democratic presidential nomination in 2004 and 2008.He defeated incumbent Republican Lauch Faircloth in...
, candidate for the 2008 Democratic Party
Democratic Party (United States)
The Democratic Party is one of two major contemporary political parties in the United States, along with the Republican Party. The party's socially liberal and progressive platform is largely considered center-left in the U.S. political spectrum. The party has the lengthiest record of continuous...
nomination for president, and the 2004 nominee for vice president, $479,512 for his consulting services, a part-time job. http://apnews1.iwon.com//article/20070517/D8P5SG100.html The November 19, 2007 edition of the Wall Street Journal reported Edwards had invested $16 Million in Fortress.
Also in 2006, Fortress acquired Intrawest in a leveraged buyout
Leveraged buyout
A leveraged buyout occurs when an investor, typically financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage...
. Three weeks before the opening of the 2010 Olympics, Fortress failed to make payment on its loan used to buy out Intrawest. This caused its creditors to force Intrawest to divest itself of several of its resort holdings in 2009 and 2010 which includes Whistler Blackcomb, in order to reduce its debt load.
Fortress loaned the controversial animal testing company Huntingdon Life Sciences
Huntingdon Life Sciences
Huntingdon Life Sciences is a contract animal-testing company founded in 1952 in England, with facilities in Huntingdon, Cambridgeshire; Eye, Suffolk; New Jersey in the U.S., and Japan...
around $70 million in 2006. This was later discovered by the animal rights group SHAC, which exists to pressurise and close HLS. In 2011 Fortress dropped all ties with HLS.http://www.shac.net/news/2011/july/10.html
Fortress Investment Group has backed a German patent holding firm IPCom GmbH & Co. KG. This firm is now suing Nokia for patent infringement for $17.77 billion.
Fortress Investment Group was the primary lender to Millennium Development Group for building the $875 million (CAD) athlete's village for the 2010 Winter Olympics
2010 Winter Olympics
The 2010 Winter Olympics, officially the XXI Olympic Winter Games or the 21st Winter Olympics, were a major international multi-sport event held from February 12–28, 2010, in Vancouver, British Columbia, Canada, with some events held in the suburbs of Richmond, West Vancouver and the University...
in Vancouver, British Columbia. Financial instability in September 2008 saw Fortress Investment Group reportedly at the brink of bankruptcy. Consequently, Fortress was unable to provide further financing to Millennium forcing the City of Vancouver to pay approximately $450 million (CAD) to complete the project in time for the Winter Olympic Games.http://www.theglobeandmail.com/servlet/story/RTGAM.20090112.wvanoc0112/BNStory/National/home. The village was completed in November 2009 and may yet realize its potential after the Olympics. http://www.nytimes.com/2010/01/15/greathomesanddestinations/15iht-revill.html
The City of Vancouver applied for and received legislative approval from the Province of BC to borrow as much money as required to enable the project to complete. http://www.cbc.ca/canada/british-columbia/story/2009/01/18/olympic-funding.html?ref=rss Anti-Olympic groups have spoken out against the legislative change because they believe that Fortress Investment will remain the owner of the village after the 2010 Winter Olympics.http://www.cbc.ca/canada/british-columbia/story/2009/01/18/olympic-funding.html?ref=rss
Response to 2008 economic crisis
In the wake of the economic downturn of 2008, Forbes included Wesley Edens (and two other Fortress principals) among its "biggest billionaire losers of 2008," noting that Edens had "watched his fortune dwindle as investor redemption soared at the company's flagship fund."Fortress and its principals were featured in an April 2009 Vanity Fair
Vanity Fair (magazine)
Vanity Fair is a magazine of pop culture, fashion, and current affairs published by Condé Nast. The present Vanity Fair has been published since 1983 and there have been editions for four European countries as well as the U.S. edition. This revived the title which had ceased publication in 1935...
article on the adverse economic conditions facing hedge funds.