[NEW YORK] SoftBank Group filed on Monday to raise US$525 million through a blank-cheque company, tapping record investor enthusiasm this year for the listing vehicles.
The special purpose acquisition company (SPAC), SVF Investment Corp, will address sectors like mobile communications technology, artificial intelligence, robotics, cloud technologies and software, according to its filing with the Securities and Exchange Commission. The company has entered into a forward purchase agreement in which it has committed US$250 million to US$300 million of capital for when it combines with another company, the prospectus shows. A merger with an SPAC allows a company to become publicly traded while avoiding some of the uncertainty of an initial public offering (IPO).
SoftBank's maiden SPAC coincides with a frenzy of IPO activity, especially in the tech sector that it's keenly focused on. Freshly minted stocks such as Snowflake, Airbnb and Unity Software have soared as investors looked beyond economic, political and corporate-profit uncertainties. For SoftBank founder Masayoshi Son, who led a multibillion-dollar spending spree in publicly traded large-cap stocks this year, creating a blank-cheque vehicle may give him a new way to invest in nascent companies while tapping the surging public markets for money.
SoftBank Group shares were down as much as 2.9 per cent in Tokyo trading on Tuesday.
The SPAC will be overseen by SoftBank Investment Advisers, which also runs the Vision Fund. SVF plans to buy a company SoftBank hasn't previously invested in, according to a person familiar with the matter who asked not to be identified discussing private information. But the prospectus notes that the SPAC won't be prohibited from pursuing a company that SoftBank is already associated with.
"It's very fitting, given that the Vision Fund is always at the cutting edge of financial engineering. The nature of SPACs also lends itself favourably to SoftBank's style of investment," said Justin Tang, head of Asian research at United First Partners in Singapore. "Ideally, they would use this to unlock value in the existing portfolio."
SVF is led by an unusually small two-person board. Rajeev Misra, the head of SoftBank's Vision Fund, is chairman and chief executive officer of the SPAC, while Navneet Govil, the Vision Fund's chief financial officer, serves in the same role for SVF.
Each unit of the SPAC will consist of one share and one-fourth of a warrant. Citigroup, Deutsche Bank and Cantor Fitzgerald are advising the listing.
The blank-cheque venture will combine the Vision Fund's expertise in tech startups with SoftBank's relatively new emphasis on public stock trading. Mr Misra originally revealed plans for the SPAC in an interview with Bloomberg News at the Milken Institute's virtual conference in October. At the time, he said details would be announced within two weeks. It's not clear what led to the delay.
SPACs ask investors to put money into a stock before knowing which company they'll back. The manager then chooses a private company and pursues a merger that lets the startup go public and inherit the capital raised. SPACs have been criticised as a more expensive way of taking companies public than traditional IPOs and have been linked to frothy valuations. But the mechanism can also allow experienced sponsors to help guide growing companies.