SoftBank is targeting over $10 billion in public investing

In recent years, SoftBank has painted itself as a champion of innovative startups, led by its $100 billion Vision Fund.

AFP
The development of a public-equities vehicle was driven partly by a long-held desire by various executives at SoftBank to pursue asset management.
By Giles Turner, Ruth David and Eyk Henning

SoftBank Group Corp. is targeting investments of more than $10 billion in public stocks as part of a new asset management arm, far exceeding the initial holdings that founder Masayoshi Son outlined to shareholders on Tuesday, people familiar with the initiative said.

The tally could reach into the tens of billions, said one of the people, all of whom asked not to be identified because the plans are private.


Son, the chief executive officer, unveiled the investment arm in a conference call to discuss earnings on Tuesday. He said the unit has about $555 million in capital. However, the amount is seen as a placeholder, people familiar with the project said; 555 is slang in Japanese gaming culture meaning “go, go, go.”

The asset management team is led by Akshay Naheta, a senior vice president in Abu Dhabi, the people said. The group has been quietly amassing multibillion-dollar stakes in American Big Tech companies over the past few months, the people said.

On Tuesday, Son said SoftBank had acquired holdings in some of the so-called FAANG stocks. FAANG refers to a group of five large tech companies: Facebook Inc., Amazon Inc., Apple Inc., Netflix Inc. and Google, whose parent company is Alphabet Inc.
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The Japanese company didn’t disclose the size of these positions. The investments were made using financing structures that can prevent SoftBank from showing up in public records as a direct shareholder, said the people familiar with the initiative.

A representative for SoftBank declined to comment. “As an investment company, we need to explore various angles and scope. But our focus is still on companies driving the information revolution,” Son said during the earnings presentation. “This is the purpose of our company.”

In recent years, SoftBank has painted itself as a champion of innovative startups, led by its $100 billion Vision Fund. That strategy faltered after WeWork and several other high-profile flameouts. But SoftBank’s dealings with public stocks have notched some wins over the past three years. It profited from investments Charter Communications Inc. in early 2018 and in U.S. chip designer Nvidia Corp., which was worth 398 billion yen when it was sold last year.

Less successful was a complicated investment in the now-infamous German payments company Wirecard. The bet profited select SoftBank employees and sovereign wealth fund Mubadala, an investor in the Vision Fund, but the collapse of Wirecard in recent months caused analysts to question the nature of the investment.
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The development of a public-equities vehicle was driven partly by a long-held desire by various executives at SoftBank to pursue asset management. Following its $3.3 billion takeover of alternative-asset manager Fortress Investment Group LLC, SoftBank also considered buying a stake in Swiss Re, the world’s second-biggest reinsurer.

SoftBank is in the process of offloading 4.5 trillion yen in legacy assets, including stock in Alibaba Group Holding Ltd., T-Mobile US Inc. and its domestic telecom unit. Some of the capital raised will fund the asset management arm, the people said. SoftBank said it will own 67% of the asset management group, and Son will personally own the rest.
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The new unit reflects the revived ambitions of Son. The founder had said in May that SoftBank was unlikely to secure outside investors for a second Vision Fund after problems with the first. But in the upbeat financial results Tuesday, Son expressed readiness to accelerate a companywide shift from telecom to investing. “Our strategy hasn’t changed,” Son said. “We still plan on unicorn hunting with Vision Fund two, three and so on.”

SoftBank’s investments in FAANG stocks are buoyed by a tech rally in the market. Uber Technologies Inc. rebounded 11% last quarter after tumbling in the first and is now trading at close to the $33 price SoftBank paid in early 2018. The performance gives a strong boost to the Vision Fund portfolio, which is heavily weighted toward ride-hailing companies, also including Didi Chuxing in China, Grab in Southeast Asia and Ola in India.

( With assistance from Pavel Alpeyev, Sarah McBride and Gillian Tan)
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