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Fidelity is offering to buy Fidelity, Up stock and up-market funds for $6bn

Introduction

The world’s biggest private equity firm has agreed to buy up to $6 billion of stocks and up to 80% of companies, including up-and-coming technology firms.

The deal is part of Fidelity’s $1.9bn (£1.1bn) stake in SoftBank, which it bought in 2015 for $13.6bn.

SoftBank’s Japanese unit, SoftBank Group, is set to be spun out as SoftBank SoftBank Holding Ltd, which is to become an investment company, in a deal that was announced on Tuesday.

Fidelity said the deal was expected to close in the second half of the year.

The announcement comes amid a slowdown in the share market, with the Dow Jones Industrial Average down nearly 100 points in early trading. 

The deal will add to the billions in cash that Fidelity has already poured into its assets. 

Fidelity, based in Lynchburg, Virginia, is the world’s largest private equity and wealth management firm with more than $1 trillion in assets under management. 

Its stake in the firm, which has a market value of $7.7bn, is expected to increase in value over the next 12 months. 

SoftBank, an emerging market-based company, was founded in 2014 and operates from Tokyo, where it operates an office. 

In a statement, Softbank said it was looking forward to investing in Fidelity and Up stock funds, a portfolio of more than 100 private equity funds that will be able to invest in the company.

The SoftBank spin-off will include SoftBank shares that will also be sold to Fidelity. 

 “SoftBank’s strong focus on financial innovation has been a central driver of FST’s growth over the past few years,” SoftBank said.

“Softbank’s strategy and technology will play a key role in the SoftBank acquisition.”

The firm said it planned to build on its existing global reach, with SoftBank investing more than US$1 trillion of its $8.6 trillion cash reserves into investing in the technology sector. 

“We expect to invest US$7.6 billion in Softbank’s technology assets, including SoftBank investments in Facebook, Airbnb and Alibaba,” Softbank added.

“We believe that the Softbank investment will contribute to FSTs growth in the years to come and will be a key driver in FST expanding its portfolio of technology assets globally.”

Fidelity’s investment will come at a time when Fidelity sees itself as an early-stage private equity investor. 

It is the only private equity in Fiduciary Trusts portfolio, with less than 5% of its capital allocated to private equity.

The firm has said that it is committed to investing aggressively in the private equity sector, and it has made significant investments in tech and other companies in recent years. 

Despite this, it is not yet clear if the investment will be as strong as some investors hoped. 

Earlier this year, the firm said that the number of Fiducial Trusts funds that it had in its portfolio had dropped by more than 20% from the end of 2015 to the end on June 30.

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