Fortress CEO sees slow buyout pace

The pace of leveraged buyouts, down sharply because of the recent rout in credit markets, may not recover before October, the chief executive of Fortress Investment Group said Tuesday.

“I don’t expect to see a lot of buyout activity in the next month, or even two, until the debt markets return to a more normalized pattern,” Fortress CEO Wesley Edens told investors on a conference call. “The market remains vulnerable in the short term to surprises that could be disruptive.”

As the sub-prime mortgage crisis has spread to the junk bond market, investors have rejected securities being marketed to fund a number of buyouts.

Edens made his comments as New York-based Fortress, the first U.S. manager of hedge funds and private equity funds to go public, reported that its second-quarter net loss widened to $55 million, or 66 cents a share, from $42 million, or 12 cents, from a year earlier because of costs tied to the company’s initial public offering in February. Profit excluding costs related partly to the IPO was 33 cents a share, beating analysts’ 27-cent average estimate.

But Fortress shares fell $1.35, or 6.6%, to $19.22. Shares of rival Blackstone Group fell $1.14, or 4.4%, to $24.57.

Firms have announced a record $717 billion of private equity transactions this year. The number of deals dropped to $87.4 billion in July from $131.1 billion in June.