Japanese telecom giant SoftBank (TKO: 9984) has set an official target of ¥10 trillion (about $88 billion) for its upcoming Vision Fund, according to the company’s fiscal 2016 earnings report released May 10. That’s a good chunk less than the $100 billion target initially reported.
There are other indications, though, that the fund’s size may end up somewhere in the middle. SoftBank may announce as much as $95 million in commitments for the vehicle as early as next week, according to a Bloomberg report, a massive pool of capital that will be put to use on nine-figure deals in the global tech industry.
Read on for more details on the fund, plus a recap of SoftBank’s very active past few months.
Baupost's investment process involves "never-ending" gleaning of facts to help support investment ideas Seth Klarman writes in his end-of-year letter to investors. In the letter, a copy of which ValueWalk has been able to review, the value investor describes the Baupost Group's process to identify ideas and answer the most critical questions about its potential Read More
A closer look at the Vision Fund
SoftBank has said it will contribute about $25 billion itself toward the fund, and other LPs have also emerged as backers. Saudi Arabia’s sovereign wealth fund could put in as much as $45 billion, per reports, while Abu Dhabi’s national wealth fund is said to be eyeing a commitment of somewhere around $15 billion. Apple and Qualcomm will also reportedly participate in the financing.
Headed up by ?SoftBank CEO Masayoshi Son, the Vision Fund will be deployed to back high-tech companies in various sectors, but particularly those in the AI industry. Over the last few months, other details have emerged about the vehicle’s scope. In a December visit with US President Donald Trump (then President-elect), Son promised half the money would go to US companies and create 50,000 new jobs in the process, according to widespread reports. And in January, Axios got a glimpse of the fund’s registration with the SEC, which revealed its classification as a private equity fund (rather than a VC or hedge fund) and that the vehicle will focus on investments that require at least $100 million in capital.
Recent SoftBank investments
Since the fund was announced, SoftBank has made several big tech investments—some from the Vision Fund, some from the company itself and some that appear to be a mixture.
Its latest big bet was on Didi Chuxing, the Chinese Uber competitor that announced a record $5.5 billion fundraise in April at a valuation of at least $50 billion. SoftBank confirmed in its earnings report that it will contribute $5 billion.
A few weeks before the Didi round was finalized, reports surfaced that India’s Paytm is in the process of raising somewhere between $1.2 billion and $1.5 billion from SoftBank. The fresh funds would value the mobile payment and ecommerce company at up to $8 billion and be one of the largest investments ever made by a single backer into an Indian startup.
SoftBank has also become a major backer of WeWork, a provider of co-working spaces, putting $300 million into the startup in March as the first of several chunks of funding in a round that could reach a total of $3 billion, with the remainder coming from the Vision Fund rather than SoftBank itself. Once the funding closes, WeWork could be valued at more than $20 billion.
Finally, here’s a look at some of SoftBank’s other recent targets for VC investment (round sizes and valuations for OYO Rooms, Hike Messenger and Darktrace based on media reports), all of which were backed by SoftBank itself rather than the Vision Fund:
Take a look at more of our SoftBank coverage.
Article by PitchBook