Fortress Investment Group LLC is adding an unleveraged sleeve to its latest private credit vehicle as it looks to broaden appeal among insurance companies and European institutional investors, according to a report by Bloomberg citing people familiar with the matter.
The move marks a shift from previous vintages of the strategy, which were reportedly offered solely in leveraged form. The new structure will sit alongside the leveraged version of Fortress Lending Fund V, which is targeting total commitments of at least $3bn. While the leveraged sleeve will invest in a mix of direct corporate lending and asset-based finance, the unleveraged option will focus primarily on direct corporate loans.
Fortress is targeting net internal rates of return of around 11% to 14% for the leveraged sleeve and approximately 8% to 9% for the unleveraged version. The firm is backed by a consortium led by Mubadala Investment Co, and has been seeking to expand its investor base as part of a broader plan to double its AUM to $100bn by 2029.
The fund launch comes amid a slowdown in global private credit fundraising, as investors remain cautious over potential markdowns in sectors exposed to technological disruption. Recent transactions under the strategy include Fortress leading a $500m private loan to refinance debt at military supply-chain company Blue Raven Solutions, as well as a forward-flow agreement to purchase up to $1.2bn of consumer loans originated by AI-lending platform Upstart.
