Rithm Capital made headlines in the alternatives world late in 2023 when it stepped in and acquired hedge fund Sculptor Capital Management, after Sculptor had undergone a period of turmoil.
Now, Rithm's CEO says he wants to bulk up and continue growing.
Michael Nierenberg, Rithm’s CEO, says he is always on the lookout for merger and acquisition possibilities and is aiming to continue building the asset manager, known for its mortgage servicing roots.
“I have huge aspirations to make Rithm — we’re not going to be Blackstone or Apollo — but I have huge aspirations to take this company, to be known as a world class asset manager, not just from an AUM standpoint, but from a return standpoint,” said Nierenberg, who also serves as president of the firm, in a recent interview at the Global Alts 2025 conference at Miami Beach.
Combining businesses
Rithm, which was known under the name New Residential until 2022, was founded in 2013 at Fortress Investment Group and focused on acquiring mortgage servicing rights in the wake of the Basel III regulations, a set of internationally agreed on measures aimed at ensuring banks have enough capital and liquidity against losses.
Since then, Rithm has grown into other areas, launching a private capital business in 2022 and asset management (Sculptor is the asset manager of hedge funds, credit and real estate). Rithm counts Newrez, a mortgage origination and servicing firm, and lender Genesis Capital among its several acquisitions since 2013.
Rithm’s combined entities, investment and operating companies at $45 billion and its asset management business at $34 billion, total almost $80 billion in assets.
Rithm drew headlines in the alternatives world when it acquired Sculptor in 2023 for almost $720 million. The move came after a public fight between the firm’s founder Dan Och and his onetime protégé and Sculptor’s current CIO Jimmy Levin that centered around pay and succession.
Nierenberg said there was “a little noise” around the Sculptor acquisition but in the more than year since, “things are really good there,” he said.
Rithm reported in its earnings supplement in February that Sculptor, which is managing $34 billion in assets, had “substantial fundraising” in 2024 with $5 billion in gross inflows. Sculptor’s multistrategy composite hedge fund returned 13.5% last year and its tactical credit fund returned 19.4%, according to the supplement.
Nierenberg said the last year involved “a lot of brand building” for both Rithm and Sculptor and “we’re starting to see real inflows” and pointed particularly to Sculptor’s real estate segment.
Pension fund commitment
The $14.1 billion Sacramento County (Calif.) Employees’ Retirement System recently committed $50 million to Sculptor Real Estate Fund V, an opportunistic real estate fund managed by Sculptor, according to P&I data.
“People want to be invested in real estate, but I think they want to be invested with the right managers, because there’s still a lot of people that are left holding the bag,” Nierenberg said.
Sculptor also restarted its CLO platform last year with Rithm making an initial anchor investment.
On the private credit side, Nierenberg sees a lot of attention around asset-based finance, something he describes as a “new coined term.”
“We've been doing asset-based lending, asset-based finance, mortgage finance, commercial real estate finance. That’s how I grew up in the business,” he said, adding that the universe today is “competitive.”
“We originate a loan, we collect a loan, or at some point we’re going to be in a credit cycle where not everything’s rosy, and to have the servicing capability around that space really matters,” he said, adding that the real winners will be mangers that “have the ability to manufacture assets and then service those assets.”
Allocators have room to the grow in the ABF space, he added.
“I think the tide is shifting to more of the so-called ABF finance. Even when you look at the residential mortgage market… it’s a $2 trillion market. Everybody's under invested there. I think globally now everybody wants fifteens and wants reasonable returns, but, I think, in this ABF space, you're going to see low double digit returns with the right managers. So I'm really optimistic.”
On the growth front for Rithm, Nierenberg said he’s “always” looking at M&A opportunities.
“I’d like to continue to look at more permanent capital. We’d like to continue to look at more what I would call lending businesses, and op-cos (operating companies), creating more,” he said.
And he’s also thinking of new products that feed into an ecosystem of underwriting, originating and servicing assets.
“We in our mortgage company, we have almost four million customers. So then the question is, are we going to roll out a credit card product at some point?” he said.
Nierenberg said on the firm’s Feb. 6 earnings call that Rithm expects to announce, likely in the next 30 days, a global energy infrastructure platform with Scale Capital Partners.
Nierenberg, who got his start in the industry in 1987 at Lehman Brothers, also sees a lot of potential in the insurance segment.
“We need to be in insurance at some point. It's a big deal for us, because we manufacture assets,” he said, adding that the challenge is “valuations are still very high.”
