SoftBank Group Corp.’s founder Masayoshi Son unveiled a second enormous fund for technology investments, seeking to keep his place as the most influential investor in the industry.
The Japanese conglomerate aims to raise a total of $108 billion for the second Vision Fund, which would make it even larger than the first, unprecedented $100 billion effort. SoftBank is also taking more control—and risk— this time around, committing $38 billion in capital itself and replacing Saudi Arabia as the largest investor. Saudi Arabia’s Public Investment Fund, which chipped in $45 billion for the initial effort, was not mentioned in the announcement Friday.
SoftBank said the second fund is expected to collect money from Apple Inc., Microsoft Corp., Foxconn Technology Group and the sovereign wealth fund of Kazakhstan. Son also won broad support from Japanese financial institutions with seven identified as signing memorandums of understanding to participate.
Son is aiming to raise a new massive fund every two or three years to take advantage of opportunities he sees in cutting-edge technologies such as artificial intelligence and autonomous driving. SoftBank in June disclosed the initial Vision Fund had earned 62% returns so far after investing $64.2 billion in 71 deals.
“I wasn’t sure it would be possible to raise $100 billion without Saudi money, but it looks like it is,” said Chris Lane, an analyst with Sanford C. Bernstein & Co. “I think it was a conscious decision by SoftBank to decrease the influence of the Saudis.”
Saudi Arabia’s PIF and Mubadala Investment Co., both key partners in the first fund, are still in talks about possible investments, said Daisuke Sawatake, a SoftBank spokesman. It’s not clear whether SoftBank or Saudi Arabia pushed for the country’s decreased role in the second fund.
Amir Anvarzadeh, strategist at Asymmetric Advisors, balked at the idea that SoftBank had made a moral decision about its business relationships. In a research note, he wrote that Saudi Arabia and Mubadala may be leery of committing so much capital because of Son’s appetite for enormous risk. In one example, Son briefly considered putting $16 billion into WeWork on top of an existing $8 billion investment— an unheard of concentration for a single deal— before deciding to add only $2 billion.
SoftBank’s move to take a greater stake in the second fund does present risks for its future. S&P Global Ratings warned that its “plan to quickly launch a second investment megafund is a manifestation of an extremely aggressive growth strategy and underlying financial policy,” the agency wrote.
— Bloomberg
