SoftBank tech fund to invest up to US$100b with Saudis

[SAN FRANCISCO] SoftBank Group Corp said it will form a new fund to invest as much as US$100 billion in the global technology industry in the next five years, partnering with Saudi Arabia's public investment fund to find tech companies that will become influential in the future.

The Saudi government will consider putting money in the fund - tentatively named SoftBank Vision Fund - and becoming the lead investment partner, with a potential investment size of as much as US$45 billion over the next five years, SoftBank said in a statement Friday.

SoftBank, which will invest as much as US$25 billion, said it signed a non-binding memorandum of understanding with the Saudis. Other large global investors may participate, the Japanese company said, with the total possible size of the fund reaching up to US$100 billion.

Softbank Vision will likely back technology companies at all stages - a strategy SoftBank employed to rack up big returns on deals including Alibaba Group Holding Ltd, Yahoo, SuperCell Oy and Didi. The mega-fund, which may target some companies traditionally backed by venture capital firms, comes during a record year for the venture industry. Through a spokesman SoftBank declined further comment, noting the fund had not yet closed.

US venture firms raised US$32.4 billion through the third quarter of 2016 - an amount which is on pace to be the largest of any since the dot-com boom, according to trade group National Venture Capital Association.

Saudi Arabia is preparing itself for the twilight of the oil age by expanding its Public Investment Fund, which could eventually control more than US$2 trillion, Deputy Crown Prince Mohammed bin Salman told Bloomberg News in April. The fund made a US$3.5 billion investment in ride-share company Uber Technologies Inc in June.

"Over the next decade, the SoftBank Vision Fund will be the biggest investor in the technology sector," Masayoshi Son, chairman and chief executive officer of SoftBank, said in the statement.

"We will further accelerate the information revolution by contributing to its development."

BLOOMBERG