Insurance company MetLife will scoop up Fortress Investment Group’s fixed-income business, the firm’s single largest source of assets under management, for $250 million.
The firms expect the transaction to close during the third quarter, according to a statement. Logan Circle Partners, Fortress’s fixed-income arm, had more than 100 institutional clients as of 31 March, and the firm’s portfolio included long-term and short-term corporate debt, emerging market debt, and high-yield bonds.
With more than $33.7 billion in AUM, Logan Circle makes up almost half of the $70.2 billion Fortress manages, according to the firm’s website.
Steven Goulart, executive vice president and chief investment officer at MetLife, said in the statement that the acquisition will benefit MetLife by allowing the firm to scale-up its fixed-income portfolio and “significantly enhance our reach in the consultant distribution channel”.
Jude Driscoll, founder and chief executive officer at Logan Circle, added that the team’s main focus and objectives will not change after its merger with MetLife.
Fortress and Softbank Group, the Japanese multinational telecommunications and internet corporation, reached a deal in February in which the latter would purchase the alternative asset manager for $3.3 billion. The transaction is expected to close in the second half of 2017, according to a statement released at the time.
With the signing of the deal, Fortress class A shareholders are set to receive $8.08 per share, which represented a premium of 38.6 percent to the closing price of Fortress class A common stock on 13 February.
The firm would operate independent of SoftBank, while the firm’s principals – Peter Briger, Wes Edens and Randy Nardone – are set to continue leading the investment manager alongside other senior investment staff. All principals have committed to invest half of their after-tax proceeds from the transaction to both Fortress- and SoftBank-managed funds and vehicles.
The acquisition also comes as MetLife is set to repurchase a large share of its stock and spin out its life insurance operator Brighthouse Financial, the statement read. The transaction will not impede the company’s goal to buy back $3 billion of its stock by the end of this year, while the separation of Brighthouse is anticipated to close next month.
Following the closing of the Logan Circle Partners acquisition and the Brighthouse spinoff, MetLife’s investment management will have more than $560 billion in total assets, the statement showed.
Neither firm was immediately available to comment further.