SoftBank Vision Fund raises $93 billion in first close
Bengaluru: Japan’s SoftBank Group Corp. said it has received $93 billion in cash for its new $100 billion fund for technology firms and start-ups in the US, Europe and Asia, including India.
Investors in the fund, called the SoftBank Vision Fund, include SoftBank, the Public Investment Fund of the Kingdom of Saudi Arabia, Mubadala Investment Co. of the United Arab Emirates, Apple Inc., Foxconn Technology Group, Qualcomm Inc. and Sharp Corp.
The Vision Fund, which is the largest ever vehicle created for technology investments, will be headed by Rajeev Misra, a veteran 54-year-old Wall Street finance executive, who joined SoftBank in 2014 after spells with UBS, Deutsche Bank and Merrill Lynch. SoftBank said the fund will get the balance $7 billion within six months.
The Vision Fund will be deployed over five years, while its exit timeline is over 10 years. It will invest in and acquire both listed and private technology firms and start-ups in areas such as artificial intelligence, robotics, mobile applications and computing, consumer Internet and financial technology. These bets will be finalized by an investment panel which will include Misra and Masayoshi Son, SoftBank chairman and chief executive. The investment panel will not have representatives from the Fund’s investors.
“Technology has the potential to address the biggest challenges and risks facing humanity today,” Son said in a statement. “The businesses working to solve these problems will require patient long-term capital and visionary strategic investment partners with the resources to nurture their success. SoftBank has long made bold investments in transformative technologies and supported disruptive entrepreneurs. The SoftBank Vision Fund is consistent with this strategy and will help build and grow businesses creating the foundational platforms of the next stage of the Information Revolution.”
In October 2014, Son pledged $10 billion in Indian start-ups over a decade. SoftBank declined to comment on how much of the Vision Fund, which was announced last October, will be deployed in India. The firm has already invested close to $4 billion across seven Indian start-ups, including Paytm, Snapdeal, Ola and Grofers. It is also trying to arrange a sale of Snapdeal to Flipkart and will invest more in the buyer if the deal goes through.
SoftBank, which is also the largest shareholder in China’s Alibaba Group, has faltered in India. One of its portfolio firms—Housing—imploded just six months after SoftBank invested $90 million in it in late 2014.
Housing was eventually sold to bigger rival PropTiger in January at a price that was less than the capital it raised. If the sale of Snapdeal goes through, it will happen at a fraction of its peak valuation of $6.5 billion.
SoftBank has also been in a publicity storm over the past one year.
Nikesh Arora, a former Google executive who joined SoftBank in 2014 as chief operating officer and the designated successor to Son, abruptly left SoftBank last June after Son decided he would remain CEO for some more time. Arora was cleared by SoftBank of charges of wrongdoing regarding its India investments and conflicts of interests regarding some other matters. A New York-based law firm, which said it was representing a group of anonymous SoftBank shareholders, had made these allegations.
On Friday, SoftBank rejected new charges that Arora and Alok Sama, SoftBank president and chief financial officer of its international arm, received kickbacks in connection to the company’s India investments.
The previous day, the Wall Street Journal reported that lawyers who claim they are representing anonymous SoftBank shareholders accused the firm of financial impropriety and that Arora and Sama had received kickbacks in connection to its India investments.
SoftBank’s appetite for high-risk investments remains undiminished.
Last July, the firm said it will buy British chip maker ARM Holdings for $32 billion.
In India, too, SoftBank is striking eye-popping deals. Last week, the company invested as much as $1.4 billion in payments start-up Paytm.