Sale option? Things SoftBank Might Do With Fortress Investment Group

The Fortress Investment Group, New York discussion is part of a broader review of the asset management unit, which could include a sale, a spinoff, or an initial public offering, the people said. They asked for anonymity since the deliberations were private.

The planned sale would surprise many in the asset management industry, given that SoftBank had previously indicated that it planned to hold onto the unit. In a February 2016 press release, the company said that the deal with Fortress would help the firm tap a global investor base and gain expertise in private credit.

The people said that SoftBank, which previously held Fortress Investment Group shares that it purchased from Quantum Strategic Partners, had been planning to boost its ownership stake in Fortress over time. That plan was cut short by Japanese share purchases that were part of a government-led bailout of the company, the people said.

Last year, SoftBank injected its shares into Fortress to raise cash to buy a majority stake in chip designer ARM Holdings PLC, as the Japanese company sought to consolidate its technology holdings.

With about $35 billion in assets under management, Fortress competes with larger firms such as Oaktree Capital Group LLC and Apollo Global Management LLC in a sector of the investment world known as credit.

One of the people said the talks might not result in a deal. SoftBank may ultimately decide to keep Fortress Investment Group or alter its relationship with the firm, the person said. The New York Fortress declined to comment. The asset manager’s appeal among SoftBank executives stems from the firm’s offshore investments.

The Fortress Investment Group CEO is a close friend and former business partner of SoftBank Group’s Chief Executive Officer, Masayoshi Son. SoftBank and Fortress declined to comment. The Financial Times earlier reported news of SoftBank’s deliberations, saying a sale of the asset manager may fetch more than $4 billion.

Hedge funds have also been exiting fixed income as rising interest rates cut into returns, with SoftBank, last year shedding a $7 billion stake in Fortress’s founder and CEO.