SoftBank taps Alibaba stake to raise $11.5bn after huge loss

Nikkei -- May 19
SoftBank Group said Monday it would raise $11.5 billion using its holdings of Alibaba Group stock, part of plans to generate 4.5 trillion yen ($42 billion) in cash to shore up its balance sheet.

"To have some cash on hand, we will pare down our assets," CEO and Chairman Masayoshi Son told a news conference.

SoftBank will use derivative contracts to be settled in a few years to raise cash from its stake in the Chinese e-commerce group.

While SoftBank appears to have no immediate cash flow problems, its Vision Fund, which had driven the Japanese technology earnings growth, has seen the value of some of its tech investments fall.

On Monday, SoftBank reported a 1.43 trillion yen net quarterly loss after big bets on real estate and ride-sharing misfired during the coronavirus pandemic.

Son warned on Monday that the titan might not pay a dividend next year after its largest ever annual loss as a public company. He told investors to expect a clutch of business failures within the Vision Fund, a $100bn vehicle backed by outside investors.

"About 15 of 88 companies [in the Vision Fund] may go bankrupt. Another 15 will grow significantly. The remaining will be so-so," Son said.

"Unicorns are falling into the corona[virus] valley," said Son, referring to the nickname for valuable tech startups.

- Nikkei