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Latest Fortress fund more than halfway to $5bn target

Fortress has completed a $2.84 billion closing on its latest fund with a $5 billion target. The publicly traded alternative investment firm simultaneously announced a $3.5 billion deal.

New York-based Fortress Investment Group said it has obtained $2.84 billion (€2.1 billion) in third party commitments for its latest fund, which it expects to close on $5 billion.

The publicly traded private equity and hedge fund manager is capping third party commitments at $4 billion, while an additional $1 billion will be contributed by Fortress employees and Fortress-affiliated funds.

Interests in the new fund are not being offered in the US, Fortress said.

Fortress also announced it has agreed to acquire Florida East Coast Industries in an all-cash $3.5 billion deal, which includes the assumption of debt and payment of a special dividend to shareholders. The company has a commercial real estate subsidiary as well as a subsidiary which operates a regional freight railway.

Under terms of the agreement, shareholders will receive $62.50 per share and a special dividend of $21.50 per share; the combined amount represents a 13 percent premium over the company closing share price on 7 May.

In February, Fortress purchased a similar regional railway operator in Florida, RailAmerica, for $1.1 billion.

Fortress became the first firm with a significant private equity business to go public in the US, when it sold a 10 percent stake in its management company earlier this year. Since its successful float, The Blackstone Group has filed for an initial public offering and other firms including Apollo Management are considering similar offerings.

Over the past five years, Fortress has raised $8.26 billion for direct private equity investment, according to the PEI 50, a ranking of private equity firms provided by sister publication Private Equity International Magazine.