SoftBank raises $22bn in moves to sell down Alibaba stake: FT

Aug 05, 2022 | News On Japan

Forward sales would mark end of an era for tech investor that grew from bet on Chinese giant

Aug 05, 2022 (Nikkei) - SoftBank has raised as much as $22bn in cash from deals that would sharply reduce its stake in Alibaba over the coming years, as the Japanese investor responds to a market downturn that has ravaged its technology portfolio.

The group, led by billionaire founder Masayoshi Son, has this year carried out the sale of about one-third of its Alibaba stake through prepaid forward contracts -- a type of derivative to which SoftBank has increasingly turned to raise cash immediately while retaining the possibility of holding on to the shares.

SoftBank has now sold more than half its Alibaba holdings through these forward sales. That could shrink its stake in the Chinese e-commerce giant below the threshold for retaining its board seat and prevent the Japanese group from recognizing its share of Alibaba's income in its financial statements.

If SoftBank opts against buying back the Alibaba shares, it would mark the end of an era. Son built his fortune on the back of leading a $20mn funding round for Jack Ma's fledgling e-commerce startup more than two decades ago, generating a huge return on investment.

"At one point Alibaba made Jack Ma the richest man in China and Masa the richest in Japan -- it's enabled all of his subsequent investing adventures," said Duncan Clark, chair of Beijing-based tech consultancy BDA China. "If [Son's] selling it down now, it shows his mindset toward China and the pressure he's under."

SoftBank has scrambled to raise cash this year as dozens of its Vision Fund investments have slumped amid a broader market sell-off in tech stocks. Son promised investors he would play "defense" in May after unveiling a $27bn investment loss for the Vision Fund during the previous business year. ...continue reading

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