Why would SoftBank Group Corp. acquire Fortress Investment Group LLC for $3.3 billion in cash? We need to understand who is SoftBank Group Corp. We also need to understand who is Fortress Investment Group.SoftBank has agreed to invest $50 billion in the United States. This was one of the deals that President Trump made to bring companies to America. Now, SoftBank has spent $3.3 billion acquiring a private equity and asset management firm, Fortress Investment Group. Some may not understand this marriage between a technology focused company and a private equity firm. One man, Jesper Koll, who is CEO of WisdomTree, called the move a “visionary strategy.”SoftBank group has been a global technology company. They have a global portfolio of companies. The companies in their portfolio include telecommunications, internet services, AI, smart robotics, loT and clean energy technology providers. SoftBank also has an investment arm called SoftBank Vision fund. When SoftBank Vision Fund invested $450 million in Compass, a real estate technology company, it was called the “largest real estate technology investment” in U.S. history.
To fully understand the whole deal, you need to see who is Fortress Investment Group. Fortress Investment Group focuses on investing in undervalued assets and distressed illiquid credit Investments. They have invested globally. The Fortress Investment Group has a team of professionals who have the expertise to evaluate the value of a company and their assets. This form of investing is very complex and difficult to understand, but it definitely gives you a leg up on your competition when you are evaluating a company’s value. They have approximately $43.6 billion of assets under management as of December 31, 2017. Fortress manages assets for around 1,750 which are both institutional clients and private investors.We need to get further understanding about the value of the deal between SoftBank and Fortress Investment Group. Fortress focuses on asset-based investing. Their private equity team has experience in evaluating physical and financial assets.
They have focused on a wide range of companies from railroads, airplanes, solar facilities, real estate, loans and leases for both commercial and consumer assets. When you invest in asset-based investing, it has a layer of protection because you have an asset like real estate to back up your investment. This will allow a foreign company, SoftBank, added risk protection. One can see that SoftBank made a fantastic deal when they bought Fortress Investment Group. They bought Fortress at a huge discount, yet the value of the investment team from Fortress will bring tremendous value to SoftBank. SoftBank will be able to utilize a firm that has evaluated companies across many industries and many countries. SoftBank will definitely benefit from Fortress Investment Group’s vast investing experience. SoftBank has only spent six percent of their investment commitment that they made with President Trump. But now, they have the added benefit of being able to evaluate distressed companies which can lead to greater returns. Since they invested in Fortress, they have an expert in this industry.