Softbank
Immediate gains for PIF and the Mubadala Fund upon completion of the deal
New York – Reuters
Posted on: August 13, 2023: 08:49 PM GST Last updated: August 13, 2023: 09:52 PM GST
Informed sources said that the Soft Bank Group is in talks to acquire the 25% stake of the “Vision Fund 1” fund in Arm Limited, which may achieve profit for investors who have been waiting for years to obtain large returns.
Vision Fund 1 is a $100 billion investment fund established in 2017, and Arm Ltd. is a chip design company. The fund and the company are owned by Japan’s SoftBank Group.
The discussions come as SoftBank prepares to list the chip designer on the Nasdaq next month at a valuation of between $60 billion and $70 billion.
If negotiations lead to an agreement, the Japanese tech investor will offer large and immediate gains to Vision Fund1 investors, including the Saudi Public Investment Fund and Abu Dhabi’s Mubadala Fund, offsetting their losses from SoftBank’s numerous bets on startups such as the workspace provider. WeWork and DD Global for ride-hailing.
An alternative might be to allow VisionFund1 to sell its ARM shares on the stock market over time after an initial public offering, but this usually takes at least one to two years given the size of the stake. It would also be more risky for the fund’s investors because ARM shares might drop after the IPO.
Vision Fund 1 returned to profitability in the last quarter thanks to investor enthusiasm about artificial intelligence, which boosted the value of some of the startups it invested in.
However, previous fund losses prevented SoftBank from securing outside investors for the Vision Fund II whose $56 billion capital came from the Japanese company and its management, such as Group CEO Masayoshi Son.
The realization of large unexpected gains for the investors of “Vision Fund 1” may enhance the chances of “Soft Bank” to benefit from them to obtain capital again in the future, as the group is considering establishing a third investment fund under the name “Vision Fund 3”.
The sources said that Son, who appointed investment bank Rain Group to advise SoftBank on the negotiations, has stepped aside from talks about the Vision Fund 1 until the fund makes an independent decision in favor of its investors.
One of the sources added that the negotiations are being managed by the Investment Committee of “Vision Fund 1” and the Investment Advisory Board of “Soft Bank”, in the presence of representatives of investors.
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2023-08-13 16:49:00
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