SoftBank in talks to raise second fund, possibly larger than $100b

SoftBank Vision Fund
Billionaire Masayoshi Son, chairman and chief executive officer of SoftBank Group Corp., gestures while speaking during a news conference in Tokyo, Japan, on Monday, Aug. 7, 2017. Photographer: Kiyoshi Ota/Bloomberg

Japanese Internet conglomerate SoftBank is in early discussions to launch another fund that can possibly be larger than its existing $100 billion Vision Fund, Recode reported, citing anonymous sources.

The report said that Masayoshi Son, chief executive officer of SoftBank, was thinking of raising another giant tech fund to compliment its Vision Fund, which has not formally closed yet.

The SoftBank Vision Fund, led by London-based Rajeev Misra, announced its first close with over $93 billion of committed capital in May and is expected to have a final close within six months.

The investors in the Vision Fund include sovereign wealth funds of Saudi Arabia and the United Arab Emirates as well as tech giants including Apple, Qualcomm and Sharp.

The first two are likely to invest in the new fund too, according to Recode, adding that the Vision Fund is also in the process of hiring senior-level positions including vice president of business operations.

The Vision Fund announced a cash injection of $250 million in Slack last month. It also doubled down its investment in WeWork, SoFi and Fanatics. It is reportedly considering investing a massive $10 billion in US ride hailing giant Uber.

These massive cash injections, however, come at a steep price. SoftBank typically negotiates tougher-than-usual terms with its portfolio firms, according to a recent report by The Information. These include the right to block a low-value IPO and sale as well as control over certain aspects of how a company is run.

The Information, in its report, noted that SoftBank got the right to prevent online lender Kabbage, in which it led a $250-million investment in August, from selling parts of itself, buying other companies, selling stock below a certain price or borrowing money beyond a certain level.

Similarly, SoftBank got a two-year right to veto an IPO, or a three-year right to block a sale, if either doesn’t result in a 50 per cent gain on its investment in online sports merchandise seller Fanatics, which raised a $1 billion round led by the Japanese behemoth this year.

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