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The banks Mizuho, Mitsubishi and Sumitomo Mitsui are, reportedly, concerned about lending to Softbank because some have lent to Softbank before and the banks have also invested in Softbank’s Vision Fund which took a hit in value from WeWork’s aborted IPO.
Softbank is said to have a $100 billion stake in Alibaba – but doubts have been raised about how potentially liquid that investment might be.
The last time Softbank sold Alibaba stock was in 2016 to fund the acquisition of Arm. It was another three years, in June 2019, before the cash from the sale was booked as a profit in Softbank’s accounts.
The Alibaba share sale was done in a curiously piecemeal way. $5-6 billion was by a private placement, $2 billion was raised from selling shares back to Alibaba, $400 million was raised by selling shares to Alibaba execs and $500 million came from a sale to an unidentified sovereign wealth fund.
The complexity of the deal, and the time it took to do it, suggests that liquidating its Alibaba share stake is not entirely straightforward.
It is the Alibaba stake that has underpinned Softbank’s ability to borrow massively to fund its investment programme.
The last time Softbank looked for a loan was in May this year when it tried to raise $4 billion from Goldman Sachs among others secured against part of its investment portfolio.
Last week Softbank reported a $6.4 billion loss largely due to downwards revaluations of its investments.
That sentence probably explains the whole crazy catastrophe, Fred
Crikey Fred it gets worse. What a silly idea – to invest at high multiples to create illusory growth. A bit like believing your own PR.
“Warned that Son had a short attention span, Snapdeal’s founders brought only 10 slides to accompany their presentation. They had got through just three when Son cut off their pitch. “I have heard enough,” he told them. “I will give you $1 billion for 49% of your company.”
Jeez, I think that says it all.
Here’s an update courtesy of Nikkei Asia Review – could the wheels be falling off ..
https://asia.nikkei.com/Spotlight/Cover-Story/Fallout-SoftBank-s-next-big-crisis-may-be-brewing-in-India?utm_campaign=RN%20Subscriber%20newsletter&utm_medium=daily%20newsletter&utm_source=NAR%20Newsletter&utm_content=article%20link&del_type=1&pub_date=20191127190000&seq_num=2&si=%%user_id%%
Absolutely Jamo and the ridiculousness of the WeWork investment makes you wonder how ridiculous Softbank’s other investments are. With Sprint pretty much bankrupt you wonder if Softbank actually has got much of a clue about business. As for Elon’s truck – it’s very witty and he says it’s selling – so what the heck?
Silicon Valley IPOs which are not very ‘Silicon’ are looking paper thin. I just signed up to a Regus office co-working office membership for a ridiculously small amount of money, and can use three fabulous offices within 5 mins walk of each other. Regus have 10 times the offices of We Work and none of the Bull.
What a stupid investment We Work was.
BTW did you see the Tesla truck ? OMG that’s what happens when Tesla decide not to let the European car designers they brought in work on it, and let the Amercians have a go.
I don’t think there are many ‘silicon’ startups in Silicon Valley anymore. A friend of mine there with a common interest in professional audio said all they do there now is write software – the silicon is almost always ARM MCUs from ST or NXP designed in Europe and fabbed at TSMC.
Your friend’s extensive research somehow missed that more silicon design activity takes place in Silicon Valley than any other geographical location in the world including Taiwan, various Chinese regions or Japan. All you have to do is look at the sales offices of the EDA tools vendors: Synopsys, Cadence, Mentor, etc. 20%+ of their worldwide sales staffing is in Silicon Valley. Follow the money.
Even for example in Silicon Glen, most of the fabs are gone. But there are more IC design offices than ever. Without the much larger employment of course.
As for the truck, Europeans simply don’t get what a ‘US light truck’ needs to do so I assume Tesla’s European designers did sketch up something but it would have been sleek and elegant and totally unsuitable for the back end of Montana or wherever. But having a 2WD version is odd – maybe they are hoping to create a ‘Chelsea tractor’ style market in the US for people who genuinely never go off-road.
The Tesla design looks very efficient for production and repair, unlike doubly curved surfaces of European cars. Cars used to look far more distinct, until all designers seemed to plunder wholesale from Citroen.
Softbank/Vision Fund sprays so much dosh around the financial community that they are frightened to criticise it, Mike,
“The WeWork debacle has eroded investor confidence but we retain our strong conviction regarding the long-term outlook for the company,” said Chris Lane, an analyst at Bernstein in a research note.
https://www.bbc.co.uk/news/business-50486914
Some people seem unable to spot a Ponzi scheme when they see it 🙂
You’ve probably just saved Masayoshi Son’s ass, Dr Bob
I’ll look down the back of the sofa