April 25, 2016 / 7:25 PM / 3 years ago

Ex-Fortress exec targets $500 million for new debt, equity fund: sources

NEW YORK (Reuters) - Maggie Arvedlund, a former Fortress Investment Group hedge fund portfolio manager and managing director, plans to start her own firm, four people familiar with the situation told Reuters.

Arvedlund, who for nine years helped to run the Fortress Partners Fund, aims to launch Turning Rock Capital with $500 million by year-end, one source said.

Turning Rock will take a similar approach to the Partners Fund, investing in debt and equity investments, the source said. It will focus on smaller and mid-market opportunities in North America and “below-the-radar” securities and portfolios, the source added.

It is not clear whether the New York-based vehicle will be structured as a hedge or private equity fund because that would depend on what Arvedlund ultimately decides to invest in, the source said. The people familiar with the situation spoke in interviews over the last two weeks on condition of anonymity because the information is private.

Fortress did not respond to requests for comment.

If Turning Rock is set up as a hedge fund, it would join a handful of such U.S. funds launched with at least $500 million. The most recent was Scott Bessent’s $4.5 billion Key Square Group, which started investing earlier this year and has hired former Fortress staff.

In 2015, just four managers - Folger Hill Asset Management, Lion Point Capital, D.E. Shaw & Co and Clearfield Capital Management - raised more than half a billion dollars for a new hedge fund, Preqin data showed.

The Fortress fund Arvedlund helped run was launched in 2006 and invested in a broad array of assets, including private debt, as well as hedge and private equity funds.

Last year, Fortress decided to scale down its hedge fund offerings. Reuters previously reported that the Partners Fund was likely to be phased out, starting with the exit of its more liquid, or easy to sell, positions. Fortress also closed its well-known “macro” hedge fund late last year and its chief, Michael Novogratz, left the firm.

Two other executives left in the fall: Stuart Bohart, co-chief investment officer at the Partners Fund, and portfolio manager and managing director David Markus.

Bohart, who also oversaw Fortress’ liquid markets business, said in an email to Reuters that he would invest in Arvedlund’s new fund.

Global hedge fund launches dropped to a five-year low of 968 in 2015, down from 1,040 in 2014, according to data from industry tracker Hedge Fund Research.

Reporting by Maiya Keidan and Lawrence Delevingne; Editing by Richard Chang

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