SoftBank mulls sale of Fortress Investment Group

With the more than $3bn acquisition of Fortress, SoftBank had intended to use the New York-based firm’s investment expertise to help manage its behemoth Vision Fund.

The possible sale is driven in part by the fact that the Japanese conglomerate was unable to mesh Fortress’s operations with its own, a source told Bloomberg News [File: Kiyoshi Ota/Bloomberg]

SoftBank Group Corp. is considering a sale of Fortress Investment Group as the Japanese conglomerate reviews options for the asset manager it acquired four years ago, according to people with knowledge of the matter.

SoftBank’s deliberations regarding Fortress are at an early stage, said one of the people, who requested anonymity because the matter is private. The move is driven in part by the fact that the Japanese conglomerate was unable to mesh Fortress’s operations with its own, the people said. Representatives for SoftBank and Fortress declined to comment.

With the more than $3 billion acquisition of Fortress, SoftBank intended to use the New York-based firm’s investment expertise to help manage its behemoth Vision Fund, which was then just being formed.

“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,” SoftBank Chairman and Chief Executive officer Masayoshi Son said in a 2017 statement.

Son’s plans were foiled. To win approval from the Committee on Foreign Investment in the U.S., SoftBank agreed to cede any control of day-to-day operations of Fortress. Since the transaction closed in December 2017, Fortress has been run independently.

SoftBank shares have tumbled about 21% this year in Tokyo trading, compared with the 8% gain by the Nikkei 225 Index.

Founded in 1998 by Pete Briger, Wes Edens and Randy Nardone, Fortress had $53.9 billion in assets under management as of June 30 across credit, private equity and permanent capital vehicles, its website shows.

SoftBank has been shedding non-core holdings including its majority stakes in Boston Dynamics Inc. and phone-distribution company Brightstar Corp. It also agreed to sell Arm Ltd. to Nvidia Corp. for about $40 billion, a deal that is facing regulatory opposition, and to offload part of its stake in T-Mobile US Inc.

There has been consolidation among alternative asset managers as firms seek to diversify offerings to deepen relationships with institutional investors such as pension funds, endowments and sovereign wealth funds. T. Rowe Price Group Inc. last week agreed to buy Oak Hill Advisors for $4.2 billion, while Franklin Templeton on Monday struck a deal to buy Lexington Partners, a firm that specializes in secondary private equity investments. Separately, Blue Owl Capital Inc. last month agreed to buy Oak Street Real Estate Capital.

Source: Bloomberg

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