Deals

Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

(Corrected )

SoftBank Group Corp. is calling in the cavalry.

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.

Cash Pile
SoftBank aims to close the first round of investments for its Vision Fund by the end of February
Source: Bloomberg News

It had been understood that through the Vision Fund, SoftBank would keep its tech focus, especially given the investors it has lined up. With SoftBank buying Fortress, we see 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.

Weakened Fortress
SoftBank is buying an asset manager whose shares plummeted soon after its 2007 IPO and have barely recovered since
Source: Bloomberg

While the Fortress purchase muddies the waters on SoftBank's focus, the Vision Fund's mixed mandate of public share investments, startup capital and private equity has it looking more like a private office -- one which happens to be owned by a public company.

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. Sure, the SoftBank Vision Fund is funded by SoftBank and co-investors, while the Fortress acquisition is being made by SoftBank itself, yet both operate under Masa's purview.

Deploying $100 billion is one huge undertaking, but throwing money at a deal with a 55 percent premium is a mighty show of SoftBank funds that lacks vision.

-- Gadfly's Nisha Gopalan contributed to this column.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

(Updates to show focus of SoftBank and Vision Fund investments from fifth paragraph. An earlier version corrected the name of Vision Fund in second paragraph.)

  1. SoftBank is paying 55 percent above the 90-day moving average of FIG's share price.

To contact the author of this story:
Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story:
Paul Sillitoe at psillitoe@bloomberg.net