Mubadala and Fortress Establish $1 Billion Private Credit Partnership

Mubadala Investment Company, based in Abu Dhabi, has partnered with Fortress Investment Group, headquartered in New York, in a $1 billion strategic move to invest in private credit markets, both entities announced Thursday.

The private credit sector has seen considerable growth recently, attracting investments from some of the world’s leading asset managers, as stricter regulations increase the cost for traditional lenders to finance higher-risk loans.

Under the terms of the agreement, the $330 billion sovereign wealth fund will co-invest in Fortress’ strategies related to private credit, asset-backed lending, and real estate.

Drew McKnight, co-CEO of Fortress, stated that their partners are increasingly expressing a need for customized and scalable investment solutions to enhance returns throughout the credit spectrum. He added that they aim to broaden borrowers’ access to capital by attracting larger and more varied sources of capital from investors.

Last year, a consortium led by Mubadala Capital, a subsidiary of Mubadala Investment Company, acquired a 68% stake in Fortress. However, the U.S. firm affirms that it maintains complete independence over its investment processes, decision-making, staffing, and operations.

UAE-based renewable energy company Masdar recently finalized its acquisition of Terna Energy in Greece.

As of December 31, Fortress managed $50 billion in assets on behalf of approximately 2,000 institutional clients.

Sovereign wealth funds in the Gulf region are expanding their presence in the private credit market.

Mubadala has established collaborations with firms such as Apollo Global Management and Goldman Sachs in recent years. In December, the company announced its intent to purchase a 42% stake in Silver Rock Financial, a U.S. credit asset manager.

Private credit typically involves non-bank lending through direct loans to mid-sized businesses, property developers, or borrowers backed by assets.

Global assets under management in private credit reached approximately $1.5 trillion in early 2024 and are projected to almost double by 2029, based on industry projections.