Months of protracted talks to sell SoftBank Group-owned asset manager Fortress Investment Group to Abu Dhabi sovereign wealth fund Mubadala have reached a late stage, with the parties close to a deal for as much as $3bn.
A sale, which would transform Mubadala into one of the largest credit investors in the world by adding Fortress’s close to $50bn in assets under management, could be announced later this month, said three people briefed on the matter. Some cautioned that talks could still falter, while the price could be below $3bn.
SoftBank acquired control of Fortress for $3.3bn in 2017 as its founder Masayoshi Son worked to build an asset management arm using its Vision funds. Son and other SoftBank executives had hoped Fortress would provide expertise in raising private funds as it sought to transform its business.
In August SoftBank said it would consider selling Fortress, beginning a process of asset sales and other cash-raising exercises as the debt-laden Japanese technology conglomerate pursues what Son described as “defence mode”.
Bloomberg first reported on the talks to sell Fortress to Mubadala last July. But the process has dragged on as Fortress executives such as co-founder Peter Briger negotiate a structure that gives them significant stakes in the business. As a “key man” on various Fortress funds, Briger has held the ability to thwart efforts he does not favour, said people familiar with the matter.
One Fortress credit fund investor said: “Fortress has been very clear with its investors since SBG announced their intention to sell the company last August — the company is in control of its own destiny and focused on maintaining the autonomy over operations and investments that they’ve always had.”
Yoshimitsu Goto, SoftBank chief financial officer, has been pushing to complete the sale to help pay down debt, with the company likely to report two consecutive years of losses on Thursday, people familiar with the matter told the Financial Times. Son has also championed the deal, hoping to capitalise on demand for credit investment strategies and a price close to what SoftBank paid for Fortress.
SoftBank, Fortress and Mubadala declined to comment.
Mubadala, which already owns a minority stake in Fortress, has in recent years expanded in credit investments through partnerships with managers such as Apollo Global Management, Ares and KKR. Its push comes as rising interest rates have bolstered yields of credit portfolios and raised hopes among distressed debt investors that a wave of bankruptcies could create opportunities.
Regulators have imposed conditions on SoftBank’s ownership of Fortress, including a US decision that thwarted plans to integrate the business. A ruling by the Committee on Foreign Investment in the US in 2018 forced the Japanese group to hold Fortress as an independent company.
Fortress could gain some strategic benefits under the umbrella of Mubadala, a fund with nearly $300bn assets under management that has become increasingly influential in private capital. High oil prices have given it cash to invest, just as other institutional investors such as US pensions retrench and manage overexposure to private assets.
With additional reporting from Sujeet Indap in New York, Kana Inagaki in Tokyo and Simeon Kerr in Dubai
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