SoftBank shows blurred vision with Fortress Investment acquisition

To date, SoftBank’s plans for humongous pile of cash have been less vision and more fund


SoftBank is paying a hefty premium for Fortress Investment Group, a publicly traded hedge-fund manager. Photo: Bloomberg
SoftBank is paying a hefty premium for Fortress Investment Group, a publicly traded hedge-fund manager. Photo: Bloomberg

After announcing the SoftBank Vision Fund last year, chairman Masayoshi Son proceeded to hire a collection of former Deutsche Bank AG executives, including Akshay Naheta, to help run the money out of an office in London’s Mayfair.

Now SoftBank is paying a hefty premium for Fortress Investment Group, a publicly traded hedge-fund manager. At $3.3 billion, you could call the deal an acqui-hire when set alongside the $100 billion Son wants to raise at his Vision Fund.

To date, SoftBank’s plans for this humongous pile of cash have been less vision and more fund. It’s certainly not a venture fund, that much is certain.

It had been understood that the fund would be tech-focused, especially given the investors it has lined up. Buying Fortress spells a radical departure. The New York-based outfit, whose stock is down two-thirds since its 2007 IPO, focuses largely on real estate and credit. It has suffered from poor currency trades and investor withdrawals, and closed a flagship macro hedge fund 18 months ago.

With the Fortress purchase, the Vision Fund’s mixed mandate of public share investments, start-up capital and private equity has it looking more like a private office—one which happens to be owned by a public company.

While it’s all well and good that SoftBank is putting its own and its co-investors’ money to work, what’s really needed is direction and focus. Deploying $100 billion is a huge undertaking, and throwing money at a deal with a 55% premium is a mighty show of funds that lacks vision. Bloomberg

More From Livemint