Fortress management, Mubadala to buy Fortress Investment Group

NEW YORK / WAM

Fortress Investment Group (Fortress) and Mubadala Investment Company, through its wholly owned asset management subsidiary Mubadala Capital (Mubadala Capital), on Monday announced that they have entered into definitive agreements to acquire 90.01 percent of the equity of Fortress that is currently held by SoftBank Group Corp, who have been the owners of Fortress since 2017.
Terms of the deal were not disclosed, and the deal is subject to customary closing conditions and regulatory approvals. After transaction close, Fortress management is expected to own a 30 percent equity interest in the company and will hold a class of equity entitling Fortress management to appoint a majority of seats on the board. Mubadala Capital (which currently holds a 9.99 percent stake in Fortress through its Private Equity Funds II and III), will own 70 percent of Fortress 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 Fortress 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 to serve on the board.
Dean Dakolias will continue in his role as Managing Partner and Tom Pulley will continue in his role as the CEO of the global Fortress Real Estate business. Jack Neumark has been appointed a Managing Partner and will continue to lead the Legal Assets business and co-head the Specialty Finance business, and Marc Furstein will continue in his role as President.
Under the new joint ownership, Fortress 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 $46 billion of assets on behalf of more than 1,900 institutional investors and private clients.
Fortress co-Founders Wes Edens and Randy Nardone will continue to oversee the PCV business and remaining PE investments, including Brightline.
Fortress is 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.
Fortress’ Pete Briger, Drew McKnight and Joshua Pack said in a joint statement, “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.”
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. We have a strong existing relationship with Fortress’ exceptional management team, and are excited to deepen the relationship further in the years ahead based on a strong alignment of vision, while delivering even greater value to our investors.”
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 LLC 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.