SoftBank Reportedly Considering Investment Fund IPO

Japanese multinational holding conglomerate SoftBank Group Corp - ADR (OTC: SFTBY) is looking to float part of its $100-billion investment fund in an initial public offering, The Wall Street Journal reported Friday.

What Happened

SoftBank, in conjunction with Saudi Arabia's sovereign wealth fund, introduced a global $100-billion investment vehicle in 2017 that will invest in startups worldwide. Under the leadership of SoftBank founder and CEO Masayoshi Son, almost all of the capital has been allocated to startups.

On Friday, WSJ reported that sources close to the matter said the "exploding startup scene" worldwide has created the need to raise additional capital.

On top of a public offering of its $100-billion investment fund, the global giant could also launch a second fund that is the same size, if not bigger, WSJ said. 

Why It's Important

Son reportedly traveled to China and secured informal deals worth billions of dollars. Technically, the fund doesn't have enough cash on hand to fulfill the obligations, WSJ said.

Even if SoftBank unloads some of its stake in upcoming IPOs from Uber and WeWork, it will still be short on funds, the report said. 

What's Next

To date, SoftBank's fund includes only outside capital from sovereign wealth funds, and it may find it a challenge to tap institutional investors, pension funds and insurers to invest capital. SoftBank can't offer the level of governance and processes that are typically mandatory.

The entire venture capital industry raised $55 billion last year, and few if any private equity funds have more than $20 billion on hand, WSJ said; SoftBank is looking to raise "multiples of that."

Related Links:

SoftBank's $100 Billion Technology Fund Establishes Its Home Base In London

What The Massive SoftBank Investment 'Vision Fund' Means For Tech

Photo via SoftBank.