Softbank Group Corp is buying alternative-asset manager Fortress Investment Group LLC for US$3.3 billion in cash to operate alongsie the Japanese company’s soon-to-be-established technology investment fund.
Japan’s Softbank is pay US$8.08 per share for New York-based Fortress, a 39 percent premium on the company’s Monday closing price, according to a statement on Tuesday.
Fortress principals Pete Briger, Wes Edens and Randy Nardone have agreed to continue leading the business, which is to remain based in New York and operate independently within Softbank, the statement said
Softbank founder Masayoshi Son is in the process of creating a US$100 billion Vision Fund with Saudi Arabia and other backers that would make the Japanese billionaire one of the world’s biggest technology investors.
The Fortress deal would be separate from that vehicle and is aimed at bringing investment talent in-house, a Softbank spokeswoman said.
The acquisition, subject to approval by Fortress shareholders as well as regulators, is expected to close in the second half.
“Fortress’ excellent track record speaks for itself, and we look forward to benefiting from its leadership, broad-based expertise and world-class investment platform,” Son said in the statement.
Fortress shares closed up 6.5 percent at US$6.21 on Tuesday, giving the New York-based company a market value of about US$2.4 billion.
Softbank shares yesterday rose 0.8 percent in Tokyo.
“Softbank is not doing a great job in communicating where this fits into their investment strategy,” Iwai Cosmo Securities Co analyst Tomoaki Kawasaki said. “There isn’t enough information and some people have an impression that this is an investment by the Vision Fund.”
Fortress was founded in 1998 by Edens, Nardone and Robert Kauffman, who came from Swiss bank UBS AG and New York-based BlackRock Financial Management Inc.
Briger was hired from Goldman Sachs Group Inc in 2002. The three founders became billionaires when the fund went public in 2007, raising US$634.3 million in the first initial public offering by a private-equity firm.
Fortress stock has slumped by nearly two-thirds since the listing, after the company booked losses over its first five years. The performance has come despite a more than doubling of assets managed by the firm, as dwindling performance by investment managers in the fallout of the global financial crisis has hit profitability.
Fortress managed US$70.1 billion in credit assets, private equity holdings, hedge funds and fixed-income investments as of Sept. 30 last year. Logan Circle Partners, a traditional bond fund manager inside Fortress, accounted for nearly half of that.
Fortress investments included distressed assets such as a railway operator in Florida and hotels in rural Japan, the film studio behind Oscar winners Birdman and 12 Years a Slave and a itcoin start-up. Nizar Al-Bassam and Dalinc Ariburnu of FAB Partners arranged the Fortress transaction and are to continue to advise Softbank with respect to the firm.
The Softbank chief has stepped up dealmaking in recent years as he transforms his company from a Japanese telecom into a more diversified investment company.
Since the beginning of 2015, Softbank has announced at least US$44 billion of investments or acquisitions, including its US$30 billion takeover of UK chip designer ARM Holdings PLC and a US$1.2 billion group-led investment in satellite start-up OneWeb Ltd, data compiled by Bloomberg show.
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