As a result of acquiring Fortress Investment Group, the Japanese SoftBank is positioning itself to become the world’s largest investment firms. The American investment firm was sold for $3.3 billion, but its daily operations will remain unchanged, as SoftBank will not interfere with Fortress Investment Groups’ assets. While SoftBank is operating in the tech area, the acquisition of Fortress points to a shift in directions and to their plans to become a bigger entity in the financial market.
Fortress Investment Group was founded in 1998 by Wes Edens, Randy Nardone, and Rob Kauffman, as a private equity firm. The firm grew rapidly and expanded into real estate investments, debt securities and hedge funds. The company manages assets on behalf of over 1,750 investors, and as of 2016 it was managing assets of approximately $70 billion. Fortress is expected to continue to function independently in New York City where it has its headquarters.
Due to the fact that the Committee of Foreign Investments oversees the transaction involving the two entities, SoftBank had to agree to have limited say in how Fortress manages its assets. Another obstacle that SoftBank had to overcome was paying a 39% premium to the share price, and settling other ongoing transactions before purchasing Fortress Investment Group.
In 2007, Fortress became a publicly traded company, being the first private equity in the United States to go public. The firm is also the first private equity to be delisted from the New York Stock Exchange, because, as a result of the acquisition by SoftBank, Fortress will become once again a private company. Co-Chair, Wes Edens declared that he is excited about being private, which implies the transition is considered a good step in the right direction, as far as Fortress is concerned.
Both entities are benefiting from the purchase. On one hand, SoftBank acquiring Fortress represents a good step in their strategy to segue into investment services – regardless of the fact that the firm will continue to operate independently. On the other hand, Fortress will benefit from the deal by becoming a private company once again and by gaining access to limited partners in Asia.