The biggest backers of SoftBank Group Corp.’s gargantuan Vision Fund are reconsidering how much to commit to its next investment vehicle as an oversized bet on flexible workspace provider WeWork sours.
Saudi Arabia’s Public Investment Fund, the first fund’s biggest backer with $45 billion, is now only planning to reinvest profits from that vehicle into the second fund, according to people familiar with the talks. Abu Dhabi’s Mubadala Investment Co., which invested $15 billion, is considering paring its future commitment to below $10 billion, the people said, asking not to be identified in disclosing internal deliberations.
A partial retreat of the two anchor investors would complicate fundraising for SoftBank chief executive officer Masayoshi Son, who upended venture capital by making huge bets on promising yet unproven companies, and spurring others to follow suit. SoftBank said in July that other investors had expressed interest in pledging a combined $108 billion for the second Vision Fund, though that was before WeWork forged ahead with plans for an IPO.
A spokesman for the Saudi Arabian wealth fund declined to comment. Mubadala said discussions are continuing on whether or not any investment will take place. A representative for SoftBank’s Vision Fund didn’t immediately have a comment.
“The suggestion we have made any decisions on the size or timing of a potential investment is simply unfounded," said Brian Lott, a spokesman for Abu Dhabi’s sovereign fund. “Our discussions continue at an appropriate and deliberate pace, given the importance of this effort."
The Wall Street Journal previously reported that Saudi Arabia’s sovereign wealth fund wasn’t planning to be a significant investor in the new fund but may still make a more modest commitment. A decision to only reinvest proceeds from the first fund would mark a signisficant shift.
Tensions have erupted within SoftBank over how it has handled its investment in WeWork. The Vision Fund, along with PIF and Mubadala, scuttled a $16 billion investment early this year Son had championed. SoftBank ended up making only a $2 billion investment from its parent entity, rather than the Vision Fund.