SoftBank Group is eager to establish itself as a global investment bank, so it’s not surprising that they recently entered into a deal to acquire another investment firm. The deal has SoftBank paying $3.3 billion for Fortress Investment Group, which will result in each stockholder receiving a buyout of $8.08 per share. When news of the buyout was made public, the price of the shares rose by 6%, but the buyout price is still 39% above the closing price on the day the news was revealed. SoftBank is controlled by Masayoshi Son, a flamboyant Japanese businessman, who is known for making surprising buyouts. The purchase of Fortress Investment Bank is surprising in that Son’s interests have previously focused on the technology and communications industries. The acquisition of Fortress indicates a new focus in the financial sector for SoftBank, confirming rumors that the company has an interest in expanding its influence as a global investment banker.
Mr. Son has previously expressed an interest in becoming the largest asset manager. Although he has focused his interests in technology, he has also shown a strategy for broadening his holdings with a goal of taking companies from a wide range of sectors under the SoftBank umbrella. Son is creating an investment fund of his own, one which will be incorporated into the Fortress Investment Group family to promote greater long-term growth.That $100 billion fund has been created with a purpose. Masayoshi is eager to capitalize on coming tech innovations, so he wants to build the capital to reinvest into the latest advances in artificial intelligence and similar innovations. Son is also interested in trends related to the Internet of Things, such as smart home devices, so Fortress Investment Group may offer more in that regard as well in the future.Fortress Investment Group is no stranger to innovation. The firm was the first hedge fund manager to offer shares to the public in 2007.
The company’s initial public offering generated more than $600 million. The company was soon valued at $7 billion and selling shares at $35, which was double the initial price of the shares. The Fortress IPO was a move to make hedge funds more accessible to the general public. Previously, hedge and private equity funds were restricted to the wealthy and the corporate investors.Today, Fortress Investment Group is just one of many publicly traded asset management groups. The price of its shares have fluctuated over the years, but they were recently up by 28% as stock prices generally increased. Fortress Investment Group has expanded into credit investing, a venture in which it has done well. However, its hedge fund management has taken some hard hits. Those struggles may take a turn under the new management represented by SoftBank. It remains to be seen how the recent buyout will affect the firm’s performance. In preparation for the purchase, SoftBank executives have shared their expectations that they will be able to double Fortress Investment Group’s assets over the next three years.