Fund Liquidity Solutions
We offer a variety of differentiated products, partnering with general partners and limited partners to support, grow and protect underlying portfolio assets and provide liquidity to GPs and LPs for a wide range of purposes. Our target investment size is typically between $50 million and $1 billion.
GP-Led
Opportunities
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Fortress is a value-added partner, seeking to bring our deep industry experience to GPs and their underlying portfolio companies
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We partner with GPs and can act as lead investor in GP-led buyouts of existing portfolio companies from older vintage year funds, accelerating liquidity to LPs, resetting GP economics and extending holding periods
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We primarily target market leading companies with high margins, strong cash generation and low leverage in defensive industries
Fund Liquidity
Solutions & Secondaries
- We are able to provide senior fund-level debt or preferred equity to preserve, protect and support growth initiatives of underlying investments and to make new accretive investments
- Fortress can offer capital to provide liquidity to investors, including LP margin loans and buyouts
- We can extend loans to GPs to support GP and management company needs, GP co-investments and liquidity facilities
- We are able to offer bespoke structures that are flexible on PIK / cash pay, delayed draw, accordion, amortization schedules and revolvers
“After a decade of low interest rates, high leverage and multiple expansion, the private equity industry is seeking alternative liquidity structures, which we believe will lead to multi-year opportunities in certain niche areas including GP-led opportunities and bespoke capital solutions for funds.”
Greg Getschow
Managing Director, GP-Led Opportunities
Fundamental Industry Shift
| Structural Dislocation | Potential Advantages of GP-Led Opportunities | Potential Advantages of Liquidity Solutions |
| Higher Interest Rates | May allow companies to maintain existing low-cost leverage at the company level (generally no need to refinance, which is typical in a traditional sale) | May allow funds and assets to maintain existing low-cost leverage and optimize their capital structure |
| Disrupted Exit Markets GPs and LPs Seeking Liquidity | Provide liquidity to LPs as well as execution in challenging exit markets | Eliminate the need for asset disposals in challenging exit markets and provide a host of liquidity options and opportunities for GPs and LPs |
| Margin Compression Valuation Compression | Ability to extend hold period of best assets | Ability to provide GPs and LPs with liquidity and hold period extension options |
| Difficulty Raising New Funds | Provide a lifeline for GPs who are unable to raise new funds | Provide fresh liquidity to existing funds for opportunistic new asset acquisitions, follow-on investments and LP distributions |
| Fund Performance Challenged With Some Funds Performing Below Hurdle Rates | Reset / new economics | Fresh liquidity can allow GPs to execute on strategy and exit assets in a more fitting market |
GP-Led Opportunities: Key Differentiators
Active Management
We are positioned in the market between direct PE investors and traditional secondary investors, bringing our industry experience to underlying portfolio companies as a value-ended partner
Focus on Value
We focus on buying at better value, seeking opportunities with market leading, middle market companies with lesser-known GPs that operate in complex industries where Fortress has deep experience
Equity Investing with a
Credit Mindset
We invest with a focus on capital preservation and cash flow while seeking to achieve strong risk-adjusted returns. Our credit approach to asset selection allows Fortress to identify opportunities with potential for early return of capital before exit
GP-Led Opportunities: Investments Generally Fall Within Four Categories
GP-Led Opportunities: Target Investment Attributes
Value Entry Price
Core criteria is a transaction with a value entry point into a high-quality company
Market Leadership
Typically seek #1 or #2 market leader, providing potential for relative out-performance in difficult economic climates and generating greater interest from buyers at exit
Near-Term Growth Catalyst
Seek investments with identifiable opportunities to increase profitability within 12 - 24 months
Strong Balance Sheet
Conservative debt levels provide more flexibility and downside protection; we avoid relying on leverage for returns
High Free Cash Flow
We prioritize cash generation (high margin / low capital expenditures) over high top line growth / low free cash flow investments
Fortress Advantage
We focus on industries in which Fortress has significant in-house industry knowledge and underwriting experience
Fund Liquidity Solutions & Secondaries: Bespoke Solutions to Address a Wide Range of Needs
Financing to stabilize fund / assets
Curing debt covenant breaches at fund or asset level, paying margin calls, optimizing repo debt and stabilizing assets
Mismatches
Asset / liability mismatches resulting from investor redemptions or a fund reaching its end of life
Opportunistic
Managers looking to leverage existing portfolios to take advantage of current market opportunities (follow-on capital, GP led tenders, co-investor buyouts and secondaries, debt optimization, buyout of GP or LP interests)
GP / management co-management or takeover
Performance, loss of AUM, difficultly raising new capital, high water mark and illiquidity all contribute to an increased number of economically unviable GPs looking to exit
Liquidating funds
Capital solutions and buyouts of funds that are winding down, have orphaned assets, and/or side pockets
Project financing or development capital
Follow-on investments
Capital injections into underlying fund assets to support growth initiatives and acquisitions
Buy-outs
Co-investor buy-outs in portfolio companies
Portfolio Holdings Investments
Protective investments in portfolio holdings requiring more time and/or balance sheet clean up prior to exit
Liquidity for Existing LPs
Early (partial) liquidity to existing LPs without premature sales of portfolio companies.
LP stake acquisitions of exiting LPs
GP management company related working capital or acquisition financing
Bridge to close secondary pe deals, especially fund restructurings
Private Equity Specialties