Japan’s SoftBank adds asset management arm
SoftBank Group is creating an asset management subsidiary in order to buy up shares in thirty large listed companies, including tech giants Amazon, Apple, and Facebook.
The Japanese holding company, known for buying private stakes in tech startups through the USD100 billion Vision Fund, announced the move into asset management on an investor call for its second quarter results.
Its CEO, Masayoshi Son, says the asset management unit is being launched to manage excess cash and diversify the firm’s holdings, which previously included stakes in T-Mobile, Alibaba, and its domestic telecoms company.
The new unit will have USD555 million in investment capital. SoftBank is set to own 67 per cent of the asset management firm, while Son will personally own 33 per cent.
Son says the unit will make direct investments in large liquid companies, and he has already made investments in Apple, Amazon, and Facebook. The subsidiary will also perform derivatives transactions in order to hedge risks.
This derivatives trading will aim to have the same effect as last year’s ‘collar transaction’ used by SoftBank when it sold its entire stake in American computer graphics firm Nvidia. This allowed SoftBank to sell Nvidia’s shares at a higher price, after its shares plummeted from a peak of USD281 per share down to USD134 in December 2018. This translated to a USD4 billion fall in the value of SoftBank’s investment, of which SoftBank managed to recover around USD2.9 billion.
In its quarterly results, SoftBank also reported net income of USD11.8 billion for the three months ended June 30, a swift turnaround after reporting a historic loss three months earlier. Profits rose mostly due to SoftBank selling part of its stake in T-Mobile, which is worth about USD21 billion.