The billionaire founder of Softbank, Masayoshi Son, has now thrown himself into the world of hedge funds and private equity. The self-proclaimed creator of the ‘tech Berkshire Hathaway’ announced his $3.3 billion acquisition of Fortress Investment Group which is an alternative asset manager in the United States. The acquisition deal by the Japanese company comes at a time when Softbank is carving a distinct place in the global market as one of the largest investors. Softbank has traditionally focused on the internet business together with telecommunications. Softbank is also planning to launch $100 billion in technology funds. This will be a first in the history of the tech business. The $70 billion in under management assets together with the $8.08 per class-A share for Fortress represents a 38.6% premium to the stock closing prices. On Wednesday last week, Softbank shares rose by 0.7% in Tokyo. This was mainly in line with the wider market share. Fortress Investment group Shares increased to $6.21 which represented a 6.5% rise from the previous trading. The jump in the shares took place before the deal was made public.
Moreover, Fortress Investment Group shares would continue to rise to $7.78 which represented a 25.3 % increase in value in after-market trading. Mr. Son released a formal statement where he said that Fortress Investment professionals would work in collaboration with Softbank in a bid to make Fortress’ Vision Fund a success. The Vision Fund is headed by a former debt trader who worked for Fortress Investment Group before moving to Softbank. Rajeev Misra was born in India and joined Softbank in 2014 as the chief of strategic finance. The individuals who got involved in the six-week acquisition of Fortress Investment Group said that it underlined Mr. Son’s ambition and vision. The Softbank’s founder has said that he is going to acquire a second and even a third fund that will follow the Vision Fund.
The Fund now has the backing of Foxconn from Taiwan, Oracle, Apple and the sovereign wealth fund from Saudi Arabia. Fortress Investment Group has people with a wider range of skills and expertise in many different industries. However, the tech industry has not been the main niche where Fortress has decided to make investments. The company mainly invests in senior living, private equity investments in consumer finance, the media sector, transport, real estate among other ventures. The $3 billion sale price is a far cry from what Fortress Investment group was valued at in February 2007 when it came into the limelight. The fortress became the first private equity group to go public at the peak of a buyout boom which had been leveraged. Fortress Investment Group was valued at $7.4 billion by its initial public offering. However, the company’s value inflated by more than 100% to over $14 billion just minutes after its debut in the stock market. Fortune’s assets did not recover from the last financial crisis as did many of the other alternative asset managers. Fortune Investment Group’s significant hedge funds suffered customer outflows and losses that led to its closure in 2015.