Publicly listed Fortress Investment Group will not pay a dividend in the third quarter in an attempt to shore up its capital base and pursue opportunities in the financial services sector.
“Given the significant dislocations in the world’s financial markets, we see tremendous opportunities for the firm to invest capital and to grow and diversify our business – in particular, we are focused on potential investments in bank, insurance companies and other asset management businesses,” firm founder Wesley Edens said in a statement. “Retaining capital inside the firm increases our ability to act on these opportunities and is the right thing for us to do.”
The dividend cut may be linked to a dip in Fortress’ fundraising pace, which has slowed significantly since last year.
In July, a deal by the firm – which has two publicly traded real estate investment vehicles, Newcastle and Eurocastle – and private equity firm Centerbridge Partners to take over US casino and racetrack operator Penn National Gaming collapsed. The two firms had agreed to buy the gaming company, which owns 19 casinos and racetracks across the US, last July for $67 a share, but the credit dislocation, the slowing US economy and delays in acquiring the necessary regulatory approvals scuppered the deal.
New capital devoted to Fortress’ private equity franchise dropped 71 percent for the 12-month period ending on July 30, compared with the same period last year, although the firm grew its total assets under management by 23 percent in that time.
Across all of Fortress’ investment vehicles, the firm raised approximately $2.2 billion in the three months ending 30 June, down from $5.9 billion in the same period in 2007.