Subsequent to quarter end, we completed the sale of RailAmerica to Genesee & Wyoming Inc. for $27.50 per share, representing a total equity value of $1.4 billion. Fortress acquired RailAmerica in a take-private transaction in 2007 and completed an IPO in 2009 at $15 per share. This investment had a return on investment of 2.2 times invested capital and a gross IRR of 17%.
During the quarter, fundraising activity was highlighted by nearly $770 million in additional capital raised for investments in mortgage servicing rights opportunities. This includes the nearly $600 million successful launch of a dedicated mortgage servicing rights fund, as well as the continuation of equity raises at Newcastle Investment Corp. (NYSE: NCT). Total capital and equity raised in the Private Equity segment was nearly $1.1 billion in the first nine months of 2012.
“The first three quarters of 2012 have been very strong for our Private Equity business,” said Wes Edens, Fortress co-Chairman and Private Equity CIO. “Valuation gains in our fund investments accelerated in the third quarter, and now stand at over 20 percent for the year, with strong operating performance at most of our large portfolio companies pointing to potential for further gains. We are very optimistic about prospects for both our existing investments, and with substantial new capital commitments, for new investments in our key areas of focus today—mortgage servicing rights, senior living, and transportation and infrastructure.”
Liquid Hedge Funds:
- Fortress Macro Fund had a net return of 11.1% for the first nine months of 2012 and an estimated year-to-date net return of 13.2% through October 26, 2012
- Fortress Asia Macro Fund had a net return of 10.7% for the first nine months of 2012 and an estimated year-to-date net return of 12.2% through October 26, 2012
- Raised approximately $167 million in new third-party capital during the quarter