Fortress To Raise $15 Billion, May Buy Mortgages

Mar 27 2008 | 2:00am ET

Fortress Investment Group plans to raise as much as $20 billion this year to pounce on opportunities created by the credit crisis.

In a conference call on Tuesday, Fortress CEO Wes Edens said the firm has already raised $2.7 billion in new capital this year, and hopes to raise between $15 billion and $20 billion by year’s end. And where will that money go? Probably to beaten-down mortgage-related securities and financial services investments, Edens said.

“Now is the time to look to buy,” he said. “The gap between the market’s perception and the actual risk is the widest I’ve ever seen.” He called the ongoing credit crunch “one of the greatest de-leveraging events of our lifetime.”

In spite of his firm’s $29 million fourth-quarter loss, Edens said its hedge funds—including its credit offerings—have more or less weathered the storm. He credited a limited use of leverage in its funds for their success, or at least, for their lack of catastrophic failure. The firm’s hybrid credit funds returned 14.43% last year, while its liquid hedge funds rose more than 18%.

“One of the key aspects is not to be over-leveraged,” Edens said. “Something that’s a good idea in any market but in a market such as this one being on the wrong side can truly be fatal.”

He added that Fortress expects “this to be a terrific investment year.”

“It will be a truly tremendous series of private-equity and other related opportunities.”

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