SoftBank Group Corp. Has Spent At Least Half Of Its Nearly $100 Billion Vision Fund In Less Than Two Years

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SoftBank’s $100 Billion Vision Fund is Already Half Spent


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By Niko Lekmokul | StockMarket@News.Today

SoftBank has spent at least half of its nearly $100 billion Vision Fund in less than two years, prompting executives to consider how the world’s biggest technology investor will raise more money to keep up that investment pace.

The Vision Fund, which is backed by the sovereign-wealth funds of Saudi Arabia and Abu Dhabi, has taken stakes in some of the world’s most valuable startups, including ride-hailing pioneer Uber Technologies Inc. and shared-office-space company WeWork Cos. LLC.SoftBank said Wednesday the fund has spent about $50 billion of its approximately $99 billion in capital.

At the roughly $7 billion-per-quarter spending rate it has logged so far, the Vision Fund’s remaining money will last another year and a half—likely less, when taking into account existing investments that may get transferred to the fund from SoftBank’s own books.

Today’s Stock Market News
Today’s Stock Market News

SoftBank Chief Executive Masayoshi Son has said since last year that he doesn’t want to let up and would like to start a second Vision Fund. “We’re going to keep up this pace of investment,” Mr. Son said in Tokyo on Wednesday. “We’re in prime shape.”

However, raising tens of billions of dollars may not be easy for SoftBank these days, as markets turn volatile and big economies like China show signs of slowing. Also, the Vision Fund’s lead backer, Crown Prince Mohammed bin Salman of Saudi Arabia, has been accused of ordering the murder of Saudi journalist Jamal Khashoggi, making some tech companies reluctant to take Saudi-tied money. The crown prince has denied involvement in the killing.

Mr. Son, the Vision Fund’s creator, said he was considering when and how to raise more capital, but it wasn’t something that needed to be “rushed in the next few months.”

SoftBank listed in December its Japanese telecommunications unit on the Tokyo Stock Exchange, though it retains a controlling stake, and it plans to merge its U.S. telecom subsidiary, Sprint Corp. , with T-Mobile US Inc. Those moves are turning the parent SoftBank into something closer to a pure technology-investment company that needs a consistent inflow of funds to stay active.

“They will need to start preparation on a second fund sometime next year,” said Chris Lane, an analyst at Sanford C. Bernstein.

A slowdown in the fund’s investments wouldn’t be a bad thing, according to some observers. “If the Vision Fund is running out of capital to invest, that might be a good thing to instill stronger financial discipline,” said David Gibson, chief investment adviser at independent research firm Astris Advisory Japan.


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In one sign of a more cautious stance, SoftBank discussed a potential $16 billion additional investment in WeWork late last year, but ultimately decided in December to scale back the figure to $2 billion.

SoftBank also pared back risk by selling its entire 4.9% stake in Nvidia Corp. in January after a sharp fall in Nvidia’s share price. The sale was disclosed Wednesday. SoftBank locked in returns of $3.3 billion on its Nvidia investment, partly because it bought the stake when the share price was much lower and because it used a financial maneuver that protected it against some Nvidia losses.

The remaining capital at the Vision Fund still easily exceeds the amount raised by the world’s second-largest investment fund, a $25 billion fund run by private-equity firm Apollo Investment Corp. , according to Dow Jones VentureSource.

Saudi Arabia’s Public Investment Fund contributed the largest amount, $45 billion, to the Vision Fund, and Prince Mohammed said in an interview with Bloomberg last year that he was willing to invest an additional $45 billion in a second Vision Fund. Mr. Son declined on Wednesday to say whether he would consider taking more money from Saudi sources.

The Vision Fund contains many investments—such as stakes in Uber and Southeast Asian ride-hailing company Grab—that SoftBank initially made with its own money and kept on its books while it waited for approval to transfer the purchases to the fund.

Some commitments require approval from the Vision Fund’s investment committee or, in particularly big cases, from the Saudi Public Investment Fund. Since the end of September, SoftBank has transferred 11 investments valued at $11 billion from its books to the Vision Fund.


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Some of the remaining capital is already spoken for. The Vision Fund has agreed to pay SoftBank $6.8 billion to buy a big stake in Chinese ride-hailing company Didi Chuxing Technology Co., SoftBank filings show. And SoftBank still has about ¥991 billion ($9 billion) of securities investments on its books, including stakes in businesses like General Motors Co.’s autonomous driving unit, which may be transferred to the Vision Fund later.

The fund’s unusual structure boosts costs as well. About 41% of its capital is in the form of preferred securities, which return 7% a year, SoftBank said Wednesday for the first time, confirming earlier reports about the structure.

If the Vision Fund runs low on money and can’t easily tap outside sources, SoftBank could step in. Mr. Son said SoftBank would set aside ¥700 billion ($6.4 billion) for investments from the profits it reaped when it listed its Japanese mobile-phone unit.


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Anyone Can Learn to Invest in The Stock Market Wisely With This Investment System. Proven 7-step Process For Minimizing Risk and Maximizing Gains. The Ultimate Guide For Make Money in The Stock Market. By SMN.Today – ( Paperback Version )

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