Japan based SoftBank Group, has announced that the company has agreed to buy Fortress Investment Group, a private equity giant, for a sum whooping sum of $3.3 billion. The America-based PE giant oversees around $70 billion in assets.
Apart from the high-value deal worth $3.3 billion, what’s more interesting is that the deal is an all-cash deal. This is SoftBank’s first major investment in an asset manager. It represents unpredictable gambit for a group that has till now focused on just telecoms and technology.
This acquisition is in line to the company’s aim to launch the world’s largest private equity fund and will provide investment expertise. SoftBank is preparing to launch its record-setting $100bn SoftBank Vision technology fund.
As per the terms of the merger agreement, which was unanimously approved by a Special Committee of Independent Directors of Fortress’s Board of Directors and Fortress’s full Board of Directors, each Fortress Class A shareholder will receive $8.08 per share, a premium of 38.6%.
In a statement, Mr. Son said:
Fortress’s excellent track record speaks for itself, and we look forward to benefiting from its leadership, broad-based expertise and world-class investment platform. For SoftBank, this opportunity will immediately help expand our group capabilities, and, alongside our soon-to-be-established SoftBank Vision Fund platform, will accelerate our SoftBank 2.0 transformation strategy of bold, disciplined investment and world class execution to drive sustainable long-term growth.
The deal represents Masayoshi Son’s typical investment style. As per the reports, the deal was organised very rapidly, within just six weeks. Similar to what he did with an agreement to buy British chip designer Arm, just weeks after the UK voted to leave the EU.
With this deal, the top three leaders of Fortress Investment Group LLC will reap a combined $1.39 billion from the sale of the alternative-asset manager to SoftBank Group Corp.
Co-Chairmen of the firm — Pete Briger and Wes Edens own stakes worth $510 million and $511 million, respectively. This is calculated at $8.08 per-share offer price, and based on ownership disclosed in the company’s recent statement. The firm’s CEO Randy Nardone’s Class A shares were valued at $371 million.
The trio have also agreed to remain in charge of the business and invest half of their after-tax proceeds from the sale in the company’s funds. Although Fortress asset managers may not be directly involved in SoftBank’s future deal activity, Mr Son has indicated the investment expertise could be shared to make its Vision Fund a success.
The $100 billion Vision fund is headed by Indian-born Rajeev Misra, a former debt trader. Before joining SoftBank, Mr Misra had a brief stint at Fortress Investments as head of strategic finance. For its Vision Fund, SoftBank has already got backing from Saudi Arabia’s sovereign wealth fund, Apple, Oracle and Taiwan’s Foxconn.
Fortress Investment Group was founded in 1998 by Wes Edens, Randy Nardone and Robert Kauffman. Pete Briger was hired from Goldman Sachs Group Inc. in 2002. The firm went public in the year 2007, and the three founders became billionaires. The payout from the sale to SoftBank will mark the second big windfall for the Fortress partners.