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Could SoftBank Challenge the Dominance of Blackstone?

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Japan’s SoftBank Group Corporation has agreed to buy New York-based Fortress Investment Group LLC for approximately US$ 3.3 billion in cash in a bid to further cement the firm’s ascension into the lucrative world of money management. Fees are the revenue drivers for investment managers. The deal worked out that SoftBank would pay US$ 8.08 per share of Fortress Investment Group, a 38.6% market premium to the firm’s February 13, 2017 closing stock price. The money is not coming out of the SoftBank Vision Fund to fund the deal. Getting into the world of alternative investments, SoftBank can challenge the dominance of firms such as The Blackstone Group and Carlyle Group, as the conglomerate is now in control of hedge fund, credit, private capital and fixed income businesses. Fortress Investment Group had US$ 70.1 billion in assets under management as of September 30, 2016. SoftBank will also get control of Logan Circle Partners, a fixed income shop within Fortress Investment Group, which accounts for US$ 33.4 billion in assets under management.

Deal Flow

The Founder, Chairman and CEO of SoftBank is Masayoshi Son and he is known for being a direct investor, putting capital to work in e-commerce ventures, internet startups, designers and telecommunication businesses. Recent examples include investments in U.K. chip designer ARM Holdings Plc and satellite company OneWeb Ltd. Son, one of Japan’s richest men, has also realized that asset management and building up sources of committed capital can enhance opportunities. Son sees more wealth funds, pensions and endowments moving money into private equity and other illiquid asset classes, while many private equity firms struggle with deal flow. For example, Boston-based Massachusetts Pension Reserves Investment Management Board (MassPRIM), in a recent board meeting approved to increase its allocation to private equity from 10% to 11%, citing top performance in this asset class.

Almost always, private equity firms without sufficient access are challenged when trying to deploy limited partner capital. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

White House Nominates Heath Tarbert for CFTC Chairman

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The White House announced Heath P. Tarbert will be nominated to serve as Commissioner and Chairman of the Commodity Futures Trading Commission (CFTC). Tarbert currently serves as Assistant Secretary for International Markets at the U.S. Treasury Department. Before joining the U.S. Treasury, Tarbert was a Partner at law firm Allen & Overy. Tarbert was confirmed by the U.S. Senate for his current Treasury post at 87 (yes) to 8 (no).

Upon Senate confirmation, Tarbert’s CFTC term would start on April 14, 2019 and last for five years. Tarbert is taking over from J. Christopher Giancarlo whose term ends in April 2019. Tarbert will need a U.S. Senate confirmation to take the head CFTC post.

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KIA Could Sell Stake in North Sea Energy Business

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The Kuwait Investment Authority (KIA), through its unit Wren House Investment Management, is nearing a deal to sell a 40% stake in its North Sea energy business to JPMorgan Asset Management. In July 2018, KIA closed on a deal to acquire oil and gas pipeline firm North Sea Midstream Partners from ArcLight Capital.

More details to follow –

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Pensioenfonds PGB Hires BMO Global for Equity Protection Strategy

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Pensioenfonds PGB is a Dutch multi-sector pension fund. PGB awarded a mandate to implement a protection strategy for its €12 billion equity portfolio to BMO Global Asset Management. PGB is a €26.5 billion fund. PGB has been using BMO Global’s responsible engagement overlay since 2017.

The Chief Investment Officer of PGB is Harold Clijsen.

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