Fortress to seek $4B for distressed play

Fortress and Oaktree are just two of several large private credit firms that are already raising money in anticipation of distressed opportunities.  

Fortress Investment Group is planning to raise $4 billion for distressed credit funds, Bloomberg reports. Sources told the publication that the alternative investment firm plans to collect $2 billion in a private equity style closed-end fund, while the rest of the money will come from managed accounts that will invest alongside the fund in distressed deals. Calls to Fortress weren’t returned by press time.

There has been a lot of debate lately among prominent private credit managers on when the market cycle will turn and whether now is a good time to start raising money for distressed opportunities expected to come to market as the economy sours again.

Others planning to raise funds for distressed strategies include Oaktree Capital Management, which has plans to raise as much as $10 billion for its Opportunities Fund X, dedicated to distressed investments. The firm reportedly plans to raise the first $3 billion soon and put it to work immediately, while raising the other $7 billion for a 'reserve pool' of capital, to be deployed at a later date. Oaktree is planning to waive management fees on the reserve capital until it is put to work.

Fortress’s last distressed fund, Fortress Credit Opportunities Fund III raised $4.3 billion in 2011. Peter Briger heads the firm’s credit business, which was launched in 2002. The firm manages money both via private equity and hedge fund structures and is headquartered in New York.