Forget retirement. SoftBank’s Masayoshi Son aims to be $100b tech investor

Masayoshi Son. Photographer: Akio Kon/Bloomberg

It turns out Masayoshi Son isn’t ready to retire after all.

Just a year ago, SoftBank Group Corp.’s founder looked poised to fulfill his long-stated plan of stepping aside in his 60’s. He had a global telecom empire, track record of spectacularly successful investments and a bright young successor. Instead, the 59-year-old edged aside his heir apparent, cut the biggest deal of his career yet and revealed on Friday his ambition to become one of the world’s most powerful investors.

SoftBank said it is forming a new fund to put as much as $100 billion in the global technology industry in the next five years, partnering with Saudi Arabia’s public investment fund to find companies that will become influential in the future. By comparison, all the venture capital funds in the world disbursed a record $129.5 billion in funding in 2015, according to CB Insights.

The man who once proclaimed his goal of creating the world’s most valuable company isn’t hiding his ambition: Over the next decade, he aims to be “the biggest investor” in technology.

In other words, Japan’s second-richest man isn’t going anywhere. Son in 2014 brought in Nikesh Arora, luring the former Google executive with a pay package that rivaled those of Apple Inc.’s Tim Cook and Walt Disney Co.’s Bob Iger. He spent two years grooming him as a successor only to change his mind in June. A month later SoftBank announced plans for a $32 billion takeover of chip designer ARM Holdings Plc, Son’s biggest bet to date and a wager on the future of interconnected devices.

“For some time, it seemed like Son has fatigued, considering retirement and bringing in Arora. It is pretty clear now that he is still full of zeal,” said Makoto Kikuchi, chief executive officer of Myojo Asset Management Co.

It is not yet clear who will call the shots at what is tentatively named SoftBank Vision Fund and the Japanese company declined to comment further, noting the fund had not yet closed. SoftBank named Rajeev Misra, its head of strategic finance, to lead the project.

Son has made tens of billions in returns from investments in companies including Alibaba Group Holding Ltd., Yahoo and Supercell Oy, and the new fund will likely pursue a similar strategy of backing technology companies at all stages. While Arora was SoftBank’s president, the company had plans to put about $3 billion into startups each year.

During his two year tenure, Arora spearheaded investments in Indian e-commerce provider Snapdeal.com, ride-hailing service Ola Cabs, real-estate website Housing.com and hotel-booking app Oyo Rooms. In October 2015, SoftBank led a $1 billion fundraising round for U.S.-based online lender Social Finance Inc.

“Over the next decade, the SoftBank Vision Fund will be the biggest investor in the technology sector,” Son, chairman and chief executive officer of SoftBank, said in a statement Friday. “We will further accelerate the information revolution by contributing to its development.”
The Saudi government will consider putting money into the fund and become the lead investment partner, SoftBank said in the statement. The Tokyo-based company, which will invest as much as $25 billion, signed a non-binding memorandum of understanding with the Saudis, who may put in as much as $45 billion over the next five years. Other large global investors may participate to increase the pool to $100 billion.
SoftBank said that the fund will be reflected on its consolidated financial statements, without giving further details. Its shares rose as much as 3.7 percent in Tokyo. The stock had gained 5.8 percent this year before today, compared with a 12 percent decline in the benchmark Nikkei 225 index.

The company is stepping up investment activity even though it has more than $100 billion in debt. SoftBank has relied on borrowing and earnings from its domestic telecom operations to pay for investments in startups in India, U.S. and China while balancing losses at its U.S. subsidiary Sprint Corp. By tapping outside investors, Son will be able to cut more ambitious deals than he could on his own.
“ARM acquisition has brought Son to a limit of how much he can invest just with SoftBank’s balance sheet,” Myojo’s Kikuchi said.
The company’s high-speed internet and wireless services in Japan generated 1.16 trillion yen ($11.2 billion) of earnings before interest, taxes, depreciation and amortization in the fiscal year ended March 31. SoftBank has 3.5 trillion yen of bonds maturing in the next five years, according to data compiled by Bloomberg.

“It’s conceivable that after capturing the core of the Internet of Things with ARM, Son will next look to other semiconductors, electronic components and software,” said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo. “SoftBank has a proven track record of investment successes. They are looking for another Alibaba.”

Bloomberg

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.