Masayoshi Son, CEO of Japanese multinational conglomerate SoftBank Group Corporation, has been making headlines for taking huge investment chances on innovative technological companies.
In March, news surfaced that SoftBank’s Vision Fund—the largest technology-focused venture capital fund in the world—had invested around $70 billion of its $100 billion funds since its foundation in November 2016.
The investments were made in technology and telecommunication companies around the world, including Uber, Doordash, OYO, The We Company and Slack. SoftBank saw great returns on their investments: 44% since 2000.
In the heels of such success, questions arose about future plans for investments and whether SoftBank would create a second Vision Fund. Son said: “We have banks who are wishing to support us for extending leverage because the value of our assets has grown.” He also let reporters know that investors were communicating their interest in the start of a new Vision Fund to invest in more companies.
Then, last week, SoftBank unveiled the much anticipated new, bigger Vision Fund 2. Now with $108 billion pledged by investors, this second mega-fund will be invested into start-ups and companies globally that are developing AI technologies, whether they be businesses working in healthcare, insurance or ride-hailing.
$38 billion of the fund will come from SoftBank itself, while the rest will come from investors like Apple and Microsoft, Foxconn, Taiwanese investors, Standard Chartered Bank PLC, National Investment Corporation of National Bank of Kazakhstan, and large Japanese banks like Mizuho, MUFG and Sumitomo Mitsui Banking Corporation.
A Standard Chartered Bank spokeswoman has clarified, though, that the bank is contributing only as a debt investor.
However, while this year’s contributors show more global interest, the first Vision Fund was mostly funded by Middle Eastern investors who are markedly absent from the list. The sovereign wealth funds of Saudi Arabia and Abu Dhabi did not opt to be on the inaugural list of investors, which comes as a surprise since they provided the largest backing of the first Vision Fund.
In October, Saudi Arabia had said they were ready to commit $45 billion through their PIF (Public Investment Fund). Now, according to Reuters, Saudi investors say they are waiting for a formal proposal from SoftBank before they invest as they are still trying to come up with a possible investment.
Goldman Sachs, the large American investment bank, also did not reappear on the first list of investors for Vision Fund 3. However, according to The Wall Street Journal, they have announced they will re-invest in the fund.
How SoftBank will fund its $38 billion investment in Vision Fund 2 is unclear, but it is possible they could recycle proceeds from the old Vision Fund as they come in. As their returns have already proven themselves lucrative, it is not a bad idea if they can keep up the income as they move from investing in companies to managing an existing portfolio that is moving towards public access.
The morning following the news of Vision Fund 2, SoftBank Group shares went up 0.59%.
