Robert Kauffman, one of three co- founders of Fortress Investment Group LLC (FIG), retired after 15 years at the New York-based investment firm, a decision made in part to avoid higher tax rates next year.
“It was a confluence of events with Fortress, myself and the tax code,” Kauffman, 49, said in a telephone interview today. “The capital-gains tax rate now is known,” he said, making it more attractive to sell now rather than wait for rates to go up.
Fortress will redeem about 51.3 million Class A shares owned by Kauffman at $3.50 each, reducing the amount of dividend-paying shares by about 10 percent, the hedge-fund and private-equity firm said today in a statement. The top rate on long-term capital gains, now 15 percent, may rise to 20 percent in 2013, according to President Barack Obama’s budget proposal earlier this year.
Kauffman, who most recently oversaw Fortress’s long-only fixed-income business Logan Circle Partners, said he’s also leaving to have more time to devote to his passion for cars. He owns a 50 percent stake in Nascar’s Michael Waltrip Racing and has a car-restoration business.
Kauffman, along with Wesley R. Edens and Randal A. Nardone, started Fortress in 1998. The company, which in February 2007 became the first large U.S. alternative-asset manager to go public, manages more than $50 billion in assets. Fortress shares have slumped about 77 percent since the IPO.
Kauffman said today he still has at least a $100 million investment in Fortress funds and related investments, so will remain aligned with the firm’s partners. The first substantial discussions about stepping down occurred last week, he said.
Prior to Fortress, Kauffman was a managing director of UBS AG from May 1997 to May 1998, and before that, was a principal of BlackRock Inc. (BLK), according to a biography posted on Fortress’s website. Kauffman has held a variety of roles at Fortress and previously led its European private-equity business.
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