Fortress Management, Mubadala to acquire Fortress Investment Group

Fortress Investment Group and Mubadala Investment Company, through its wholly owned asset management subsidiary, Mubadala Capital, have entered into definitive agreements to acquire 90.01 per cent of the equity of Fortress, which is currently held by SoftBank Group, the company’s owners since 2017.

Terms of the deal were not disclosed, and the deal is subject to customary closing conditions and regulatory approvals.

After the transaction is complete, Fortress management is expected to own a 30 per cent equity interest in the company and will hold a class of equity entitling its management to appoint a majority of seats on the board.

Mubadala Capital (which currently holds a 90.99 per cent stake in Fortress through its Private Equity Funds II and III), will own 70 per cent of its equity.

After the closing, Fortress will continue to operate as an independent investment manager under the Fortress brand, with full autonomy over investment processes and decision making, personnel and operations.

Drew McKnight and Joshua Pack will be appointed co-CEOs of the company and Pete Briger will be appointed chairman. Mubadala Capital’s CEO and managing director, Hani Barhoush, who has served on Fortress’ board since 2019, will continue his role.

Under the new joint ownership, the company is expected to generate significant value for its stakeholders by further establishing itself in the alternative investment space, particularly in credit and real estate across public and private markets, where it currently manages $46n of assets on behalf of more than 1,900 institutional investors and private clients.

Fortress to benefit from Mubadala’s network

The company is also expected to benefit from Mubadala Capital’s global network and extensive portfolio of diversified assets, as well as its access to proprietary investment opportunities to support its growth and expansion.

“We are extremely pleased to deepen our relationship with Mubadala, partnering with one of the world’s most sophisticated investors in a transaction that will provide significant long-term benefits to our company, our employees and the clients we serve.  We have worked closely with Mubadala for years and have enormous respect for their investment acumen and discipline. We view Mubadala’s further investment as an affirmation of the business model and investment approach we have embraced for more than 20 years, and—at a time when market dynamics are better aligned than ever before with our experience and expertise— we could not be more excited about the future of Fortress,” said Fortress’ Pete Briger, Drew McKnight and Joshua Pack said in a joint statement.

Hani Barhoush, CEO and managing director of Mubadala Capital, said: “Fortress is a world-leading investment manager with a proven track record of delivering superior risk-adjusted returns to its investors throughout business cycles. Over the last 20 years, they have built an incredible franchise and established themselves as a premier credit and asset investor while simultaneously growing investment strategies across a wide range of asset classes.”

The transaction is expected to close in the first quarter of 2024, subject to regulatory approvals.

Ardea Partners served as financial advisors and Shearman & Sterling served as legal counsel to Mubadala.

Goldman, Sachs & Co served as financial advisor and Kirkland & Ellis served as legal counsel to Fortress senior management in the transaction. Skadden, Arps, Slate, Meagher & Flom LLP represented Fortress in the transaction.

The Raine Group served as exclusive financial advisor and Morrison Foerster served as legal counsel to SoftBank.

In recent news, Abu Dhabi sovereign investor, Mubadala Investment Company (Mubadala), released its 2022 financial results for the group. The company surpassed global benchmarks, bolstered by active management of its portfolio, robust capital deployment and its monetisation programme.

The sovereign investor backed two of the 10 biggest deals in healthcare in 2022, investing alongside EQT in Envirotainer, a provider of cold chain solutions for the pharmaceuticals industry; and, together with Warburg Pincus, in the $2.6bn purchase of Informa Pharma Intelligence, a data and software company for clinical trials and drug development.

Photo courtesy: WAM