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22 March 2020

SoftBank seeks $10 billion to aid Saudi-backed Vision Fund companies

The Vision Fund—which counts Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala Investment Company as its biggest backers—had spent $80,5 billion of its $98,6 billion as of 31 December 2019

The fund plans to reserve some of the remaining cash to pay back a coupon attached to the Saudi investment/Bloomberg

by Bloomberg

SoftBank Group plans to raise an additional $10 billion so its first Vision Fund can support portfolio companies battered by the coronavirus pandemic.

The fund is in talks with outside investors to provide $5 billion, which will be matched by a $5 billion contribution from the Japanese conglomerate. SoftBank may be unable to secure sufficient commitments from investors, in part because Middle Eastern sovereign wealth funds have been rocked by the steep decline in the price of oil.

The novel coronavirus is sapping demand for ride-hailing and other services provided by SoftBank-backed companies, heightening concern over the conglomerate’s creditworthiness and the value of its investments.

Even before the global pandemic, SoftBank founder Masayoshi Son was fielding criticism for his strategy of pouring billions of dollars into unproven and unprofitable start-ups such We Co.—which failed to live up to the inflated valuations.

The fund plans to reserve some of the remaining cash to pay back a coupon attached to the Saudi investment. The new capital would be used to support struggling portfolio companies and to fund opportunistic acquisitions of smaller rivals whose valuations have also been battered.

SoftBank is also reviewing the 88 companies in the first Vision Fund as well as ones in its nascent successor, Vision Fund 2, to ascertain their viability amid the pandemic, some of the people said. Some of these companies may not have sufficient cash on hand to survive for more than a year.

Already, some of the fund’s largest investments have taken a hit. Uber Technologies shares have more than halved in the past month, in part because its ride-sharing service Uber Pool has been banned in certain geographies.

Some of the other closely held companies including food delivery companies DoorDash are poised to be beneficiaries as consumers around the world observe ‘shelter in place’ orders and other mandated quarantining.

RELATED STORIES: SoftBank The Vision Fund Public Investment Fund Mubadala Investment Company





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