Fortress Investment Group has agreed to acquire the investment funds and operating platform of Mount Kellett Capital Management. The transaction, which is subject to the approval of the majority of Mount Kellett’s investors, is expected to close on or around 30 June, PDI sister title PERE reported.
Under the merger, Fortress will reportedly invest $200 million in Mount Kellett’s existing investment funds and effectively become co-manager of the Mount Kellett Capital Partners fund series. The funds are 60 percent allocated to corporate debt and 40 percent to real estate special situations. In the future, all fundraising and investment of third-party capital will be done under the Fortress name, PERE reported.
Both Fortress and Mount Kellett have significant experience in special situations, particularly in credit and global real estate. They also share similar geographic profiles, as both have offices in New York, London, Dallas and Hong Kong. Approximately 70 out of 104 Mount Kellett employees, including McGoldrick, are expected to transfer to Fortress upon the closing of the transaction.
“Fortress has a world class credit business, with exceptional people, disciplined investment acumen, a deep understanding of our strategies and a strong institutional framework,” said McGoldrick, who also serves as chief investment officer of Mount Kellett, in a statement. “We are very pleased to be partnering with Fortress. Our investors will benefit from the access and support of a global operational platform and the combined asset management expertise of the Mount Kellett and Fortress teams across the distressed and special situations spectrum.”
Indeed, McGoldrick and Peter Briger, Fortress principal and co-chairman of the board, have known each other for more than two decades, and together formed Goldman Sach’s special situations group in the 1990s. Briger left Goldman in 2002 to launch Fortress’ credit business, while McGoldrick departed the New York-based investment bank in 2007 to start Mount Kellett with fellow Goldman alumnus Jason Maynard.
Fortress had $69.9 billion in total assets under management as of 31 March. Of that amount, $13.8 billion was invested in credit, of which approximately a third is in real estate. Meanwhile, Mount Kellett manages approximately $5 billion in assets and its investments include special situations, opportunistic real estate, secured loans, loan portfolios, and commercial mortgages.