Wednesday, 2023 November 29

SoftBank Vision Fund looks to set up a special purpose acquisition company

SoftBank Group Corp. is looking to set up a new special-purpose acquisition company (SPAC) under its Vision Fund, a high-profile investment subsidiary that focuses on backing technology startups across the globe.

A Reuters report, citing sources, said the Japanese conglomerate is eyeing external funding for a blank check acquisition company. SoftBank may also put its own capital into the company, details of which would be revealed in the next two weeks, the report said.

A blank check company refers to a development stage company that either has no specific business plan or has indicated its business purpose to engage in a merger or acquisition with other companies. Special purpose acquisition company or SPAC is a type of blank check company, which is formed to raise funds via an initial public offering (IPO) to finance a merger or acquisition within a certain time frame.

Read this: SoftBank wants to burn money

During a virtual global conference earlier this week, SoftBank Vision Fund head Rajeev Misra mentioned that he is preparing to launch a SPAC and that the new investment vehicle aims to give the Vision Fund a new way of investing in private companies and give public investors access to SoftBank’s portfolio manager picks. He added that he would outline more plans in the next two weeks. Such vehicles are increasingly being used to take the companies public, bypassing the traditional IPO.

“These are late-stage investments so potential returns may not be as high but the risk profile should be lower and liquidity higher as investments quickly enter the public domain,” Kirk Boodry, analyst at Redex Research told Reuters.

This comes at a time when SoftBank’s chief executive Masayoshi Son has been selling some of his core assets to generate cash.

The Tokyo-headquartered behemoth reported a net profit of USD 11.8 billion for the April-June quarter, which marked a sharp recovery for the firm after its worst-ever loss in the previous quarter. The turn around was primarily attributed to the merger and sale of its stake in the US mobile carrier Sprint and a recovery in its USD 100 billion Vision Fund. During the earnings presentation, Son said the stockpiling cash would remain a priority until the coronavirus-led pandemic is under control.

The company, which has been struggling to raise capital for the second Vision Fund due to the poor performance of its first USD 100 billion Vision Fund, is now said to be investing on a smaller scale with its own money via the second fund.

Moulishree Srivastava
Moulishree Srivastava
In-depth, analytical and explainer stories and interviews on technology, internet economy, investments, climate tech and sustainability. Coverage of business strategies, trends in startup and VC ecosystems and cross-border stories capturing the influence of SEA, China and Japan on the local startup industry.

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