SoftBank gets upsized US$11.9 billion loan in OpenAI funding push

[HONG KONG] SoftBank secured an US$11.87 billion loan to support its investment in US artificial intelligence firm OpenAI, people familiar with the matter said, up from its earlier target of US$10 billion.

The Japanese conglomerate sealed the two-year facility last week, attracting commitments from around 20 banks, said the people, asking not to be identified because they are not authorised to speak publicly. 

Softbank declined to comment.

The financing comes as some executives are now voicing the need to slow the pace of AI development due to escalating risks from the technology.

OpenAI chief executive officer Sam Altman said in an interview with Fortune that his company would not proceed with a public offering this year as it addresses safety-related concerns.

SoftBank shares tumbled as much as 13 per cent on Monday (Sep 14), the most since Jul 17.

The latest borrowing would add to SoftBank’s wave of recent debt financing activities tied to its bet on OpenAI.

That includes a US$10 billion margin loan backed by its OpenAI stake and a potential bond sale of as much as US$20 billion, despite concerns about growing credit risks in the AI sector. 

SoftBank said last week that it would repay the balance of a US$40 billion loan it obtained earlier this year to finance its investment in OpenAI.

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The company plans to pay down the US$25.9 billion it owes on Sep 15, according to a statement. The non-collateralised borrowing was due to mature in March 2027.

Meanwhile, SoftBank is set to hold meetings with investors in New York this week to sound out interest for the potential US dollar junk-bond sale.

It is considering raising US$10 billion to US$20 billion from the bond offering, people familiar with the matter said in August. 

SoftBank, founded and led by billionaire Masayoshi Son, is slated to invest close to US$65 billion in OpenAI by October.

The company has already raised the equivalent of about $37 billion so far this year from offshore and domestic bond sales and loans, including the latest facility, according to Bloomberg-compiled data. BLOOMBERG