Established two decades ago, Fortress investment group has made the biggest impact in the alternative investment markets. It would especially make most of its fortune by investing in distressed markets and credit markets as well as real estate. Softbank, on the other hand, was established close to four decades ago, and only centered it operations around investing in technological startups.
Its acquisition of the New York-based Fortress investment group was therefore unprecedented. Investment industry players can’t even tell who stands to benefit most benefits from the deal. Here are some pointers that the transaction may be mutually beneficial:
Softbank takes Fortress shares of the market
Soon after fortress investment group listed become the first private equity firm to trade publicly, pressure from investors started mounting. In their first decade of operation, the principals made most of their business investment decisions based on instincts and the size if returns expected from the investment. Read more on wikipedia.org
With the listing, however, came the need to please the investors. They had to consistently post positive returns during the earnings calls, making it hard to invest in the more rewarding but long-term investments. By taking these shares off the market, Softbank helps bring back some level of investment sanity to the hedge fund.
Fortress presents a new investment avenue
Softbank rarely invests in non-technology companies. Since its establishment, it has concentrated its investments efforts in the technology startups and struggling technological companies scene. It has however embraced a global diversification strategy with the ultimate goal of becoming the biggest alternative investment firm in the world. The highly diversified Fortress Investment Group, therefore, presents the banker with a great avenue of penetrating the different markets.
Exchange of expertise and tools
Softbank has access to an unrivaled pool of technological tools relating to data collection, tabulation, and forecasting. Deploying some of these to Fortress investment group would help the hedge firm simplify some of its operational tasks thus achieving more operational efficiency and productivity.
Fortress on the hand has access to some of the most experienced and widely exposed research analysts. Their ability to evaluate industry trends and tell off good from bad investments early on would go a long way in helping Softbank achieve its mission of conquering the global alternative investment industry.