Softbank Group Holding wants to attract $41 billion to maintain its position on the market
The coronavirus epidemic has caused enormous damage to the largest economy, the Chinese economy. Not only small producers, but also world-renowned corporations have been affected here. Among them was Softbank Group, a holding company represented in the spheres of telecommunications, finance, investments and others. The positions of the giant were shaken, so it decided to get rid of some assets to support its business.
According to the statement of Softbank representatives, it is planned to sell a part of Alibaba Group Holding shares worth $14 billion. In total, the holding intends to attract about $41 billion – this amount will cover part of the losses and restore business processes.
The Softbank Group structure has the areas that have suffered the most. These include Vision Fund. With assets amounting to $100 billion, the fund showed a significant decrease in profitability. This is due to the fact that it has a high debt burden, invested a number of startups that did not show positive results and became unprofitable. Among the latter are Wework and Oyo Hotels. The fund also manages assets, which were primarily affected by quarantine: hotels, coworkings and other places that are characterized by crowds of people.
It should be noted that Softbank had some problems even before the crisis. Over the past few years, the investors of the holding insisted that some of the securities be returned to the shareholders and the debts be repaid. The difficult situation related to the coronavirus outbreak and the global crisis has shown the correctness of such a step, and now the management is trying to attract as much money as possible.
In addition to Alibaba Group Holding, it will have to sell some of the shares of Softbank Corp and Sprint Corp, which conducted a merger with T-Mobile US, and other assets to eventually raise $41 billion.
Stock exchanges reacted instantly to the news from Softbank – the corporation’s securities increased by 21% on the trading floor in Tokyo.
The largest volume of the holding’s investments in the amount of $120 billion was directed to the development of Alibaba Group. The shares of the latter gained 2.7% in value on the Hong Kong exchange.
The money, which Softbank will receive as a result of the sale of assets, will be used to buy back the securities of the corporation itself, as well as to reduce debt.
Softbank Group was founded in 1981 by entrepreneur Masayoshi Son. The company was engaged in software sales, and thanks to the ambitions of its owner it has grown into one of the largest technological conglomerates in the world. Song has many hopes for the Vision Fund, which should help innovative start-ups in electronics, robotics and other promising industries. In this way, Softbank will gather under its management advanced technologies of the future, which will allow it to take a leading position in the world market.
