Mubadala and Fortress form $1bn private credit partnership

Abu Dhabi’s Mubadala Investment Company has entered into a $1 billion strategic partnership with New York-based Fortress Investment Group to invest in private credit, the companies said on Thursday.

Private credit has expanded in recent years, attracting investments from some of the world’s largest asset managers, as stricter regulations make it more expensive for traditional lenders to finance riskier loans.

The new partnership will see the $330 billion sovereign wealth fund co-invest in Fortress’ private credit, asset-based lending and real estate strategies.

Private credit refers to non-bank lending, typically in the form of direct loans to mid-sized companies, real estate developers or asset-backed borrowers.

“In conversations with our partners, we increasingly hear that they want tailored and scalable investment solutions that can enhance returns across the credit spectrum,” Fortress co-CEO Drew McKnight said.

“We’re seeking to expand borrowers’ access to capital by securing larger and more diverse pools of capital from investors,” he said.

A consortium led by Mubadala Investment Company subsidiary Mubadala Capital acquired a 68 percent stake in Fortress last year, though the US firm says it retains full autonomy over investment processes, decision-making, personnel and operations.

Fortress had $50 billion of assets under management as of December 31 on behalf of around 2,000 institutional clients.

Gulf sovereign wealth funds are expanding their footprint in the private credit space.

• Mubadala subsidiary makes first investment in US energy sector
• Better terms and returns swell private credit demand
• Private credit will be ‘hottest asset class in the region’

Mubadala has forged partnerships with the likes of Apollo Global Management APO.N and Goldman Sachs GS.N in recent years.

And in December, it said it would buy a 42 percent stake in US credit asset manager Silver Rock Financial.

Global private credit assets under management reached roughly $1.5 trillion in early 2024 and are projected to nearly double by 2029, according to industry estimates.