SoftBank Group Corp. is aiming to close the first round of investment
in its planned $100 billion technology fund by the end of this month,
giving Chief Executive Officer Masayoshi Son an enormous war chest to go on the hunt for deals, according to people familiar with the matter.
The
initial investments will likely include $45 billion from Saudi Arabia
and $25 billion from SoftBank, as well as $1 billion each from Apple Inc.,
Qualcomm Inc. and Oracle Corp. Chairman Larry Ellison, the people said,
asking not to be identified because the matter is private. Abu Dhabi
investor Mubadala Development Co. may join the first round,
though it could also wait until a later time, they said. The initial
round is likely to exceed $80 billion and the timing of the closing may
still change, said one of the people. It’s not yet clear when the
remainder of the planned financing would be raised.
Son announced plans for the Vision Fund
in October, vowing to become the biggest investor in the technology
industry over the next decade. He has already been among the most
acquisitive, buying Sprint Corp. for $22 billion and ARM Holdings plc
for $32 billion along with stakes in hundreds of startups. The new fund
will give him cash to cut even larger deals as he aims to capitalize on
emerging trends like artificial intelligence and the so-called Internet
of Things.
“When I first founded this company, all I could think about is how to stretch the finances until the end of the month,” Son said Wednesday
after his company’s earnings announcement. “Recently, the span shifted
to 10 and 30 years ahead. I’m now seriously thinking about how to make
sure that SoftBank group can grow for the next 300 years.”
A spokesman for SoftBank declined to comment. Son said the fund is in its “final stages.”
The 59-year-old billionaire is finding renewed energy after long saying he planned to retire in his 60s. Last year, he publicly changed his mind and said he wants to remain in charge indefinitely, leading to the departure of his one-time heir apparent Nikesh Arora.
SoftBank
may announce deals within days of the fund’s first closing, one of the
people said. The company has had preliminary discussions to make an
investment in WeWork Cos., a New York-based startup for sharing office space,
said the people, cautioning a deal may not be finalized. WeWork, with
more than 140 locations around the world, was most recently valued at
$16 billion.
SoftBank has also agreed to invest
$1 billion into OneWeb Ltd., a startup based in Exploration Park,
Florida that aims to provide internet connectivity from satellites. Son
said Wednesday that the deal would go into the new fund.
“All the vision in the world is for naught when you don’t have finances,” said
Satoru Kikuchi, an analyst at SMBC Nikko Securities Inc. “The fund is a
great scheme, considering the limitations of SoftBank’s balance sheet.
It could be much more than an investment vehicle, becoming an embodiment
of Son’s philosophy.”
Son built his reputation making risky bets
in telecommunications and technology. He bought the third-largest
wireless operator in Japan, turning it into a fierce competitor for the
market leaders. He also backed startups such as Alibaba Group Holding
Ltd., putting an initial $20 million into the Chinese e-commerce company for a stake that exceeded $70 billion.
He
is assembling the Vision Fund because he sees even greater
opportunities ahead. He cited as examples the leaders of the so-called
sharing economy, 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,” he said Wednesday. “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.”
Son’s focus may well be the U.S. after he met with President
Donald Trump in December and pledged to create 50,000 new jobs by
investing $50 billion in startups and new companies. He said OneWeb and
Sprint will add about 8,000 jobs, contributing toward that goal.
Son
hasn’t given many details on how the fund will be deployed, once it is
raised. It is likely to be a mixture of many investments on the scale of
OneWeb with a handful of very large deals. "This won’t be a typical
fund,” he said. “Most of our investments will range between 20 and 40
percent, making us the largest shareholder and board member, in a
position to discuss strategy with the founders.”
Son has said that the ARM acquisition
last year, his largest ever, is aimed at capitalizing on the Internet
of Things, or the idea of integrating computer technologies into
everything from refrigerators to roads and clothes. He also sees promise
in bringing the internet to regions of the world that haven’t been
connected yet. That was part of the attraction to OneWeb, which is aimed
at using satellites to provide coverage in remote areas.
source: https://www.bloomberg.com
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