Softbank keeps rolling the dice with $3.3bn Fortress acquisition

Softbank has confirmed its $3.3 billion acquisition of Fortress Investment Group, a US-based asset manager which currently has significant holdings in various tech companies including Lyft.

While last years’ ARM acquisition may have hogged the headlines, the Softbank VC team has been much more active. Alongside the £24.3 billion to buy ARM, the team has also recently invested $1 billion in Korean mobile commerce company Coupang, as well as substantial cash injections into Indian e-commerce company Snapdeal and Uber competitor Ola Cabs. Bringing the Fortress on board will offer a wealth of experience in a high-stakes game.

“Fortress’s excellent track record speaks for itself, and we look forward to benefitting from its leadership, broad-based expertise and world-class investment platform,” said Masayoshi Son, Chairman and CEO of SoftBank Group Corp.

“For SoftBank, this opportunity will immediately help expand our group capabilities, and, alongside our soon-to-be-established SoftBank Vision Fund platform, will accelerate our SoftBank 2.0 transformation strategy of bold, disciplined investment and world class execution to drive sustainable long-term growth.”

While the ARM acquisition looks to be the legacy of CEO Masayoshi Son driving a venture into the IoT market, this moves looks like it’s taking the company in a different direction. New President Nikesh Arora, Son’s likely successor, seems to be taken the investment strategy of the company down safer avenues.

Arora’s methodology seems to be more of an arm’s length look at emerging companies. The most recent pattern of investments at Softbank is more focused on a larger number of minority stake purchases in emerging technology companies who at the earlier stages of development.

It’s a much more passive approach to investments, hedging bets and spreading Softbank’s influence further afield. It’s a less bullish and less assertive approach, but it’s safer in a time where telcos are facing a huge amounts of pressure. If a bet works out, Arora get credibility, if it doesn’t, it becomes a much simpler task to divest.

While this approach would be applauded by risk adverse investors, it is certainly a turnaround from the bold Son mind-set. Yes, there are likely to be wins by spreading the bets, but the wins will never be as big as some would hope.

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