San Francisco/London/Tokyo: Masayoshi Son is asking Wall Street banks to open their pocketbooks if they want in on what could be the biggest-ever initial public offering, according to people familiar with the matter.
SoftBank Group Corp. has told potential underwriters seeking a large role in the blockbuster IPO of its Japanese wireless unit that they should offer to lend to other parts of the parent company’s empire, said the people, who asked to not be identified because the matter isn’t public. One option being discussed is banks lending a combined $8 billion, said two of the people, with SoftBank’s stake in British computer-chip designer ARM Holdings Plc being used as collateral, one of them said.
SoftBank is dangling the carrot of participating in the IPO of SoftBank Mobile to increase access to additional capital via the banks, the people said, adding that it has discussed options including using stakes in its companies as collateral. Firms offering financing are seen as much likelier to get a spot on the IPO, the people said.
“There is no truth to this," SoftBank Spokesman Takeaki Nukii said by phone, declining to comment further.
Shares of SoftBank fell 0.6% to 9,945 yen as of 9:46 a.m. in Tokyo. The stock has gained 11% this year compared with a 7.6% drop in the Topix index.
No final decisions have been made about the structure of the loans or their collateral and SoftBank could still decide to give roles to non-lending banks as well, the people said. Some of the discussions have also included the idea of lending to SoftBank’s almost $100 billion Vision Fund, some of the people said.
At stake for the world’s biggest banks are the fees and prestige from participating in potentially the biggest-ever global listing. SoftBank is talking to advisers about selling a one-third stake in SoftBank Mobile in a listing valuing the company at $90 billion, people familiar with the matter said in August.
IPO-bound companies and their backers typically give preference to banks that they have worked with on deals or used as a customer. Take Snap Inc.: The disappearing photo application maker placed a big consideration on which firms had loaned it money when choosing underwriters, people familiar with the matter said at the time. Bank of America Corp. declined to lend to the money-losing company and ultimately didn’t have a role on its listing, the people said.
The situation with SoftBank Mobile is unique, though. That’s because some firms have been asked to lend to a different part of the conglomerate than the company that’s actually listing, the people said.
Banks are evaluating whether the lending being discussed is possible, the people said. Such deals would have to clear a risk assessment at large firms, they said.