SoftBank seeking US$10b to support Vision Fund companies: sources

[LONDON] SoftBank Group Corp is seeking to raise an additional US$10 billion so its first Vision Fund can support portfolio companies battered by the coronavirus pandemic, according to people with knowledge of the matter.

SoftBank is in talks with outside investors to provide US$5 billion, which will be matched by a US$5 billion contribution from the Japanese conglomerate, said the people, who requested anonymity because the talks are private. SoftBank may be unable to secure sufficient commitments from investors, in part because Middle Eastern sovereign wealth funds have been rocked by the steep decline in the price of oil.

The novel coronavirus is sapping demand for ride hailing and other services provided by SoftBank-backed companies, heightening concern over the conglomerate's credit worthiness and the value of its investments. Even before the global pandemic, SoftBank founder Masayoshi Son was fielding criticism for his strategy of pouring billions of dollars into unproven and unprofitable startups, some of which - like We Co - failed to live up to the inflated valuations.

His company's stock plunged by the most on record on Thursday in Tokyo, bringing the decline to almost 50 per cent in the past month alone, erasing as much as US$50 billion in market capitalization.

The Vision Fund - which counts Saudi Arabia's Public Investment Fund and Abu Dhabi's Mubadala Investment Co as its biggest backers - had spent US$80.5 billion of its US$98.6 billion total as at Dec 31, according to filings.

The fund plans to reserve some of the remaining cash to pay back a coupon attached to the Saudi investment, said some of the people. The new capital would be used to support struggling portfolio companies and to fund opportunistic acquisitions of smaller rivals whose valuations have also been battered, some of the people said.

SoftBank is also reviewing the 88 companies in the first Vision Fund as well as ones in its nascent successor, Vision Fund 2, to ascertain their viability amid the pandemic, some of the people said. Some of these companies may not have sufficient cash on hand to survive for more than a year, one of the people added.

Representatives for SoftBank and SoftBank Investment Advisers, the entity that manages the Vision Fund, declined to comment.

Already, some of the fund's largest investments have taken a hit. Uber Technologies Inc shares have more than halved in the past month, in part because its ride-sharing service Uber Pool has been banned in certain geographies.

Some of the other closely held companies including food delivery companies DoorDash Inc are poised to be beneficiaries as consumers around the world observe "shelter in place" orders and other mandated quarantining.

BLOOMBERG