SoftBank Group Corp. and Saudi Arabia formally announced the first round of capital commitments for the largest-ever technology investment fund, as founder Masayoshi Son seeks to accelerate his financing of cutting-edge technologies and startups.
More than $93 billion has been secured from backers led by the Japanese company and Saudi Arabia’s Public Investment Fund, SoftBank said in a statement Saturday. Abu Dhabi’s Mubadala Investment Co., Apple Inc., Qualcomm Inc., Foxconn Technology Group and Sharp Corp. are also investing, and SoftBank aims to reach $100 billion with a final close within six months. Mubadala committed $15 billion, according to a separate statement.
The Vision Fund will allow the billionaire Son to cut even more ambitious deals than he’s been able to do with his highly leveraged company. He has used money from his domestic telecom operations to pay for investments in startups in China, India and the U.S. and for acquisitions of larger companies such as U.K. chipmaker ARM Holdings Plc and U.S. wireless operator Sprint Corp. Now he sees richer opportunities than ever before in areas like artificial intelligence and the Internet of Things.
“SoftBank has long made bold investments in transformative technologies and supported disruptive entrepreneurs,” Son said in the statement. “The SoftBank Vision Fund is consistent with this strategy and will help build and grow businesses creating the foundational platforms of the next stage of the Information Revolution.”
Yasir Alrumayyan, managing director of Saudi Arabia’s sovereign wealth fund, said the fund will help his country’s strategy of developing “a diversified, knowledge-based economy.” Khaldoon Khalifa Al Mubarak, chief executive officer of Mubadala, said the SoftBank fund “perfectly complements” the company’s strategy to become an investor in high-growth technology companies.
Son has made tens of billions from investments in companies including Alibaba Group Holding Ltd., Yahoo! Inc. and Supercell Oy, and the new fund will pursue a similar strategy of backing technology companies at all stages. The U.S. will be a focus after Son met with President Donald Trump in December and pledged to create 50,000 new jobs by investing $50 billion in startups and new companies.
That same month, Softbank contributed $1 billion to a funding round in OneWeb Ltd., a satellite startup based at Exploration Park, Florida near Kennedy Space Center. In March, SoftBank invested $300 million in WeWork Cos., a U.S. startup that rents out office space and desks to small businesses and freelancers.
Son has vowed to be the biggest investor in the technology industry over the next five years and he has already begun to make good on that pledge. SoftBank invested $5 billion into the Chinese ride-hailing giant Didi Chuxing last month in the largest-ever venture fundraising. This month, the Japanese company put $1.4 billion into the digital payments startup Paytm in the largest funding round from a single investor in India’s technology sector. SoftBank also plans to participate in a $1.5 billion funding round for the ride-sharing service Grab in what would be the largest in Southeast Asia.
Behind the frenetic deal-making is Son’s opinion that opportunities in technology are better than ever. In February, during an earnings call, he cited the changes in the so-called sharing economy, led by Uber Technologies Inc. and Airbnb Inc.
“Uber is redefining the transportation industry now; Airbnb is doing it to the hotel industry. You can expect that to happen in every single industry,” Son said at the time. “There is a big bang coming and it’s too good of a chance to pass up. We need to be in a position to face it head on. SoftBank Vision Fund’s role is to get us there.”
The Vision Fund may take over part of SoftBank’s recent deals. For example, the fund will have the right to acquire 25 percent of SoftBank’s holdings in ARM, OneWeb and the U.S.-based online lender Social Finance Inc. The fund will also be able to buy a quarter of SoftBank’s holding in the U.S. chipmaker Nvidia Corp., a stake that had not been previously disclosed.
The Vision Fund will be based in West London’s Mayfair and advised by SoftBank subsidiaries collectively called SB Investment Advisers. Rajeev Misra, SoftBank’s head of strategic finance, will be chief executive officer of SB Investment Advisers and a member of the fund’s investment committee. Nizar Al-Bassam and Dalinc Ariburnu, who helped with fundraising, will continue as advisers.
Son himself will have unusual influence over investments. He will be the only so-called key man in the fund, according to a person familiar with the matter. There are typically several people with such a designation in investment funds, which gives limited partners the option to withdraw from the fund if one of those key men leave.
Shares of SoftBank are up about 25 percent since the fund was announced in October, buoyed by the prospects it would ease the strain on the Japanese company’s balance sheet. Son’s appetite for deals has left SoftBank with a record $130 billion debt load, one of the heaviest in Japan.
Source:Bloomberg
