Fortress Investment Group Taken Private by SofBank

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Fortress Investment Group Taken Private by SofBank

4
Sep,2018

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SofBank, the Japanese conglomerate with over 400 internet-related companies, acquired Fortress Investment Group, which is one of the larger investment groups in the US. SofBank was founded four decades ago in 1981 by Masayoshi Son. SofBank paid $3.3 billion to add Fortress to its portfolio of companies.

Despite the hefty price tag Fortress Investment Group’s management team will likely to continue past management practices, as regulatory approval required SofBank to remain at arms-length from Fortress’ sizeable assets.

SofBank originally wholesaled PC software. They soon diversified into computer magazines and tradeshows. In 1996 they bought Yahoo!. SofBank has continued rapidly branching into new areas. Today they focus primarily on tech startups.

Current CEO Randal Nardone and Co-Chairman Wes Edens founded Fortress Investment Group in 1998. The firm has more than 1750 clients, both individual and institutional investors. Fortress calls New York home but maintains a facility in San Francisco that is closer to their Asian investments. Peter Briger mans the San Francisco headquarters.

The purchase was not straightforward. Before the Fortress deal, which required regulatory approval in the US, SofBank had to clean up several sales and acquisitions, a couple of which also were subject to regulatory approval. Founder Masayoshi Son attempted to grease the skids a bit during the approval process. He visited Trump Tower in New York City not long after President Trump took office. While he was at it, he pledged to invest $50 million in the US.

The deal was a big boost for Fortress and especially its principals who came out the deal roughly $1.39 billion richer in combined wealth. The SofBank acquisition took Fortress private, which delighted Wes Edens who doesn’t miss the periodic earnings calls of a public company.

SofBank recently made its biggest move ever when it created the Vision Fund. The fund, valued at approximately $93 billion, is the largest such fund ever. SofBank plans to start a London-based alternative asset fund — such funds tend to deal in distressed debt that is unpopular with mainstream capital firms. If they need advice getting it started, Peter Briger, a Fortress principal, is an absolute master of investing in distressed debt.

While it may seem odd that SofBank would invest in Fortress Investment Group, given that they must remain mostly hands off, they are interested in branching into financial services and Fortress Investment Group has an exceptional reputation in that sector. For Fortress the acquisition greatly increases its reach into Asian markets. It’s a win-win for sure.

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