Edens ‘crazed’ at fund underperformance

The co-founder of Fortress Investment Group admitted to Oregon's investment council his firm’s most recent fund was challenged.

Wes Edens, co-founder of alternative investment giant Fortress Investment Group, is disappointed at the performance of Fortress Investment Fund V, a $5 billion vehicle closed in 2007.

The comment was made in December before the board of the Oregon Investment Council, an investor in Fortress funds. Private Equity International magazine obtained a recording of the exchange.

Answering a question from Partners Group consultant Nori Gerardo Lietz about whether Oregon could expect to receive back “100 cents on the dollar” from its commitments to Fortress funds, Edens said that “Funds II, II and IV [closed in 2003, 2004 and 2006] are all very likely to be good funds”.

Wes Edens

Fund V, however, is “not likely to make two times your money”, Edens said. “I’m crazed about it.”

According to a disclosure from the Oregon Investment Council, as of 30 June, 2009, Fortress' Fund V has been written down to a 0.44x multiple.

Edens continued, “I think vintage analysis for 2007 is going to be pretty miserable. . .” (PEI subscribers may read further about the Oregon exchange here.)

In related news, Edens said last week during a speech at the Columbia Business School Private Equity & Venture Capital Conference in New York that the transportation assets owned by Fortress funds had been “doing the best” relative to other assets. Fortress acquired RailAmerica in 2006. The company was publicly listed last year.

He also predicted that among the key developments in private equity going forward would be “significant growth” of the private equity industry in developing economies.