Financial titans Fortress Investment Group and SoftBank Group have recently announced an agreement in which SoftBank will acquire Fortress for $3.3 billion.
Fortress Investment Group is one of the largest alternative asset managers in the entire world, which as of September 2016 had over $70 billion is assets under its management. Fortress has over 1,750 clients and private investors across the globe in a diverse field of credit, real estate, private equity, and traditional asset management.
A global technology company, SoftBank Group consists of a suite of global companies within its portfolio, including smart robotics, clean energy, AI and advanced telecommunications. The move to get Fortress Investment Group is not its only bold move of late, as it acquired ARM Holdings, PLC, a leading semiconductor IP firm, in 2016. That deal was another blockbuster coming in at $32 billion. Earlier, in 2013, they gained control of Sprint.
The boldness that SoftBank displays is an extension of its leadership, run by Masayoshi Son. The terms of this deal give an unusual amount of autonomy to Fortress Investment Group, which will continue to run with leadership intact, led by Pete Briger, Randy Nardone and Wes Edens. Son has committed his company to allow Fortress to keep its brand and business model.
Alternative asset managers such as Fortress Investment Group have become sought after because their model encourages higher fees and typically requires a longer-term investment from their backers. This is likely because of the increasing popularity of index-tracking funds which are low-cost, which drives down revenue at more traditional money management institutions.
Under the terms of the deal, all the Class A shareholders at Fortress will receive $8.08 a share, which was 38.6% above the price of the stock at the time of the deal. Each Class of these shareholders will also receive quarterly dividends not more than $0.09 for each Class A share. A Force of Innovation: Two Decades of Fortress Investment Group