$100 Billion SoftBank Tech Fund to Invest With Saudis
On Friday, SoftBank Group Corp. stated that it has to form a new fund to invest as much as $100 billion. It has to be invested in the field of global technology industry in the next five years. The firm partners with Saudi Arabia's public investment fund to search companies that in the future will become influential.
The government of Saudi will mull over in putting money into the tentatively named SoftBank Vision Fund. As the potential lead investment partner, SoftBank affirmed. The Tokyo-based company, which will invest as much as $25 billion, signed a non-binding MoU with the Saudis, which may place in as much as $45 billion over the next five years. Global investors at large may participate to increase the pool of investment to $100 billion.
SoftBank has successfully made tens of billions in returns from investments in companies which include Alibaba Group Holding Ltd., Yahoo and Supercell Oy. The Vision fund will likely push through a similar strategy of backing up technology companies at all stages. The confirmation and announcement transpires just three months after Chairman Masayoshi Son discerned to make the biggest bet of his life with the $32 billion acquisition of chipmaker ARM Holdings Plc, a wager on the future of interconnected devices.
Hideki Yasuda, an analyst at Ace Research Institute in Tokyo expressed "It's conceivable that after capturing the core of the Internet of Things with ARM, he will next look to other semiconductors, electronic components and software." He added that SoftBank has a proven track record of investment successes. They are searching for another Alibaba."
SoftBank shares rose as much as 2 percent in early Tokyo trading. The stock had gained 5.8 percent this year before today, compared with a 12 percent decline in the benchmark Nikkei 225 index.
The mega-fund, which may target some companies primitively backed by venture capital firms, comes during a record year for the venture industry. U.S. venture firms raised $32.4 billion through the third quarter of 2016.
Saudi Arabia is prepares itself for the twilight of the oil age by expanding its Public Investment Fund, which could eventually control more than $2 trillion, Deputy Crown Prince Mohammed bin Salman told Bloomberg News in April.
"Over the next decade, the SoftBank Vision Fund will be the biggest investor in the technology sector. We will further accelerate the information revolution by contributing to its development." said Son