SoftBank Group is seeking to raise an additional $10 billion so its first Vision Fund can support portfolio companies battered amid the coronavirus pandemic, according to people with knowledge of the matter.
SoftBank is in talks with outside investors to provide $5 billion, which will be matched by a $5 billion contribution from the Japanese conglomerate, said the people, who requested anonymity because the talks are private.
To be sure, SoftBank may be unable to secure sufficient commitments from investors, in part because West Asian sovereign wealth funds have been rocked by the steep decline in the price of oil.
The Vision Fund — which counts Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala Investment as its biggest backers — had spent $80.5 billion of its $98.6 billion total as of December 31, according to filings.
The fund plans to reserve some of the remaining cash to pay back a coupon attached to the Saudi investment, said some of the people. 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, some of the people said.
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, one of the people added.
Representatives for SoftBank and SoftBank Investment Advisers, the entity that manages the Vision Fund, declined to comment.
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.
Source: Business-Standard