SoftBank today (15/02/2017) said that it will buy Fortress Investment Group for US $3.3 billion. SoftBank, which has so far focused on investing in the Telecom and Technology sectors, is now going to buy an Investment firm. This is SoftBank’s first major investment/venture outside the Telecommunication and Technology sectors. SoftBank intends to buy Fortress Investment Group entirely in cash (no cheque). This move comes in the wake of SoftBank’s founder, Masayashi Son, announcing in October 2016, that the bank is joining hands with Saudi Arabia to raise US $100 billion technology fund. Read more on Company Purchases
This deal will help the bank to fund startups with private equity cash instead of debt.
“Son’s strategy appears to be to use Fortress’s know – how to move from debt financing to private equity financing. It’s a logical progression for the company”, said Gerhard Fasol of Eurotechnology Japan, a Tokyo – based consultancy.
SoftBank had hired one of Fortress Investment Group’s senior executives, Rajeev Misra, in 2014. Rajeev Misra now runs the SoftBank – Saudi Arabia technology fund. The New York – based Fortress Investment Group had so far invested in the fields of real estate, hedge funds and private equity. In the year 2016 alone, Fortress Investment Group had invested a total of US $70 billion in all its investment domains. It is one among the few foreign global investors whose funds are targeted at Japanese assets.
In the wake of the 2008 Global Meltdown, Fortress Investment Group had bought many loss – making companies and startups (bad loans) especially in Italy and Japan. In Japan, it bought a hotel owned by Lehman Brothers after the crash of 2008 hit their business hard. SoftBank’s founder Son said, “The deal would accelerate our SoftBank 2.0 transformation strategy of bold, disciplined investment and world – class execution to drive sustainable long-term growth”. Though the growth of Fortress Investment Group in 2016 has been impressive. Its overall growth has not been upto the mark. Fortress was the first US investment firm to go public in the year 2007. It was valued at US $14 billion back then. Read more on Startup News