① Japanese investment giant SoftBank is raising funds to fulfill its commitment to invest an additional $22.5 billion in OpenAI by the end of the year; ② SoftBank's stock price rose 4.09% on Monday, while the Nikkei 225 rose 1.81%, influenced by news that SoftBank and OpenAI will reach an agreement; ③ SoftBank CEO Masayoshi Son has asked the Vision Fund to slow down most of its other investments in order to consolidate funds.
Japanese investment giant SoftBank is scrambling to raise funds to fulfill its commitment to invest an additional $22.5 billion in OpenAI by the end of the year. Industry insiders indicate that SoftBank is considering selling a stake in chip design company Arm, or other holdings in publicly traded companies.
In March of this year, SoftBank reached an agreement with OpenAI, under which SoftBank will invest up to $40 billion in OpenAI. After deducting the $10 billion invested by other partners in the investment consortium, SoftBank's actual investment amounted to $30 billion.
The initial $7.5 billion investment was completed in the first quarter. SoftBank was originally scheduled to invest an additional $22.5 billion in OpenAI after its restructuring, but in October, the SoftBank board removed the conditions and confirmed that it would invest another $22.5 billion in OpenAI before the end of this year.
On Monday, Japanese stocks rebounded on artificial intelligence following news that SoftBank would reach an agreement with OpenAI. The rally saw SoftBank rise 4.09% and the Nikkei index gain 1.81%, shaking off the shadow of last week's rate hike and suggesting that investors will overlook the impact of policy tightening as the prospects for artificial intelligence improve.
Accelerate fundraising
For SoftBank, OpenAI's continuously rising valuation presents an investment opportunity that cannot be missed.
Under the agreement, SoftBank invested $30 billion in OpenAI when its valuation reached $300 billion. However, OpenAI's latest deal with Amazon... In the investment negotiations, its valuation has already doubled to $900 billion, which is a very considerable paper profit for SoftBank.
On the other hand, the massive investment amount also puts SoftBank's financing capabilities to the test. According to industry insiders speaking to the media, SoftBank CEO Masayoshi Son has instructed the Vision Fund to slow down most of its other investments, and any deal exceeding $50 million requires his explicit approval in order to secure as much funding as possible.
It is understood that SoftBank can fulfill its investment commitment to OpenAI through various funding sources, including cash, publicly traded shares, corporate bonds, and loans. Currently, its primary source of funding is a margin loan facility secured by Arm equity, which has not yet been drawn down, totaling $11.5 billion.
In addition, SoftBank held approximately $27 billion in cash as of the end of September, part of which came from the sale of Nvidia. The $5.8 billion came from the acquisition of shares and the $4.8 billion from the sale of T-Mobile shares. SoftBank also holds approximately 4% of T-Mobile US, valued at approximately $11 billion.
SoftBank's cash flow pressure is also related to the US government shutdown that began in October. It originally planned to IPO its subsidiary PayPay, the "Japanese version of Alipay," on the US stock market in December, but the prolonged government shutdown forced a postponement. Reports indicate that PayPay will go public in the first quarter of next year, and is expected to raise over $20 billion.
(Article source: CLS)
