Amid Share price Instability, SoftBank's Alibaba shareholding is under focus

The turbulence in Chinese technology stocks is dampening SoftBank Group Corp.'s available funds for fresh acquisitions, fueling speculation about whether it might sell some of its massive position in Alibaba Group Holding Ltd.

Alibaba, SoftBank's largest single stake, and other Chinese IT businesses have been hammered hard by Beijing's crackdown on the industry over the last year, and have been extremely volatile in recent weeks. Other digital businesses supported by SoftBank, such as Uber Technologies Inc. and Coupang Inc., have also seen their stock prices tumble.

The Nasdaq Golden Dragon China Index, which tracks Chinese equities traded in the United States, has dropped 52% in the year. Alibaba has lost 49% of its value, while SoftBank's Tokyo-listed shares have lost 40% of its value.


SoftBank is approaching its self-imposed debt ceiling of 25% due to the drop values for its businesses, according to David Gibson, a senior research analyst at MST Financial in Australia who follows the Japanese technology market.

Didi Global Inc., whose U.S.-listed shares have plunged more than 70% from their IPO price of $14 last summer, is one of SoftBank's Vision Fund holdings.

Masayoshi Son, Chairman and CEO of SoftBank Group has already raised tens of billions of dollars in recent years to finance fresh projects, secured by stock in Alibaba and a few of SoftBank's other publicly traded companies while avoiding an explicit selling.

SoftBank's willingness to creative and sometimes complex financial arrangements is demonstrated by this investment financing, which uses a mix of swaps and loans. The loan-to-value ratio, which measures traditional debt, is unaffected by the numbers.

Alibaba's stocks have recovered most of its year-to-date declines thanks to a recent intervention by Chinese authorities to rebuild investor sentiment and a decision by Alibaba to extend its repurchase programme to a new $25 billion.