Fortress To Fully Offload Stake In GAGFAH - Analyst Blog

New York-based investment management firm Fortress Investment Group LLC FIG will finally exit from GAGFAH as it is set to vend the remaining stake in this Germany-based residential property company. The deal is expected to close on Jun 13, 2014.

As per the deal, Fortress and its affiliates will offer 60.5 million GAGFAH shares for sale and the total proceeds will stand at around $986 million. Notably, Fortress has been trimming down its stake in GAGFAH. Previously, Fortress has offloaded stake in GAGFAH in Jul 2013 and Dec 2013, with the recent sale in Apr 2014.

Luxembourg-based GAGFAH (Gemeinnützige Aktiengesellschaft für Angestellten-Heimstätten) is currently one of the major players in residential real estate market in Germany. GAGFAH was created through a series of acquisitions in 2004 by Fortress's Private Equity division.

Given the current strong market position, the latest move by Fortress will aid GAGFAH to grow independently. On Fortress' part we believe the move reflects its strategy to book profit by shedding mature portfolios. Notably, during the life time of GAGFAH investment, Fortress funds garnered proceeds of $3.8 billion on a total equity investment of around $2.9 billion.

Further, net proceeds from the transaction can be utilized in the repayment of debt, making future strategic investments and other corporate needs.

Fortress currently carries a Zacks Rank #3 (Hold). Some better performing stocks in this space include Cohen & Steers Inc. CNS, Woori Finance Holdings Co., Ltd. WF and Ameriprise Financial, Inc. AMP. Both Cohen & Steers and Woori Finance hold a Zacks Rank #1 (Strong Buy), while Ameriprise carries a Zacks Rank #2 (Buy).

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