Softbank Mulls Sale of Fortress Investment Group
Fortress Investment Group, an asset management firm in New York, has been the subject of news reports that it may be sold to Softbank. The company was founded by Wesley Edens, Rob Kauffman, and Randal Nardone in 1998. According to Bloomberg data, Fortress Investment Group is currently worth $43 billion with subsidiaries including WesEd Capital Management LLC and Springleaf Financial Services Inc.
The plans for a sale are not yet finalized, but if they go ahead, it could be one of the most significant deals on Wall Street this year. Softbank is looking for a buyer that could pay a premium of as much as 30 percent on the company’s current market value. Fortress Investment Group would allow Softbank to expand its assets under management and build a platform rivaling its close competitor, BlackRock.
Softbank has been on the lookout for deals as it looks to diversify from telecoms. In October 2017, Softbank’s Vision Fund acquired British chip designer Arm Holdings for $32 billion (£23 million). Most of that purchase price was funded by Saudi Arabia, including some from an oil company, Riyadh-based Aramco. As part of the deal, Arm will establish its new headquarters in Cambridge, creating 3,000 new jobs giving it access to university research that is expected to contribute towards future innovation.
Fortress Investment Group has been a profitable company in recent years in New York, and it is not clear why Softbank would want to sell it, but there are a few possible explanations. The first possibility is that Softbank may simply want to cash out its investment in Fortress and take the profits.
The second possibility is that Softbank may be preparing to make a bigger bet on the technology sector and is selling off some of its non-tech investments. The third possibility is that Softbank may be facing pressure from its shareholders to reduce its debts and selling Fortress Investment Group is one way of doing that. However, if part of the deal is that Softbank will remain an investor, it would need to be consulted on important decisions. Refer to this page for additional information.