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SoftBank Group’s $108 billion and the Vision of the Fund, 2 draws, Microsoft, Apple

TOKYO (Reuters) – SoftBank Group Corp (9984.(T) will be announced on Friday, with a second Vision of a Fund focused on investing in technology companies, says that it has secured memorandums of understanding (MOU) for the roughly $108 billion from the companies, including Microsoft Corp (MSFT.D).

FILE PHOTO: a japanese SoftBank Group, Corp Chief Executive Masayoshi Son attends a news conference in Tokyo, Japan, Nov. 5, 2018. REUTERS/Kim Kyung-Hoon/File Photo

The Japanese conglomerate, is itself planning to invest $38 billion into the fund, it said in a statement. Others have been from Apple Inc’s (AAPL.And taiwan’s Hon Hai Precision Industry Co., Ltd. (Foxconn) (2317.T), that is, the investors in the first fund.

The second fund is the investor base, which reflects the diversification out of the Middle East, most of the initial $100-billion fund out of the capital and SoftBank touts industry-beating returns.

“That is, invest in two years ago to invest in the vision, there was no evidence to show that the concept is going to succeed,” says Sanford C. Bernstein analyst Chris Lane.

“Given the track record of the past two years, the Vision Fund and 2 has been significantly de-risked,” Lane said.

SoftBank in May said the initial fund was raised to 45% internal rate of return to investors in its common stock, or 29% if the debt-like preferred shares, while the gains are mostly on paper.

On Friday, he said that the other members of the second fund, the National investment corporation of National Bank of Kazakhstan Standard Chartered Bank PLC (STAN.(L) and private party (Taiwan).

The fund has broad-based support from Japan’s financial sector, including the entities of the three largest banks, Mitsubishi UFJ Financial Group Inc (8306.T), Sumitomo Mitsui Financial Group Inc (8316.(T) and Mizuho Financial Group Inc (8411.(T), SoftBank statement showed.

It is said Daiwa Securities Group Inc (8601.(T), and Dai-ichi Life Holdings, Inc. 8750.(T) and Sumitomo Mitsui Trust Holdings Inc (8309.T) is also a part of it.

“The objective of the fund is to facilitate the continued acceleration of the AI revolution is on by investing in industry-leading, tech-enabled growth companies,” SoftBank said in a statement.

The founder and Chief Executive, Masayoshi Son, does the use of artificial intelligence (AI) as a catch-all term to characterize the SoftBank portfolio, which includes businesses as varied as a ride from and to autonomous driving, insurance companies, and health care.

IN A LATE-STAGE START-UPS

The first Vision is a Fund launched two years ago with $60 billion in support from the sovereign wealth fund of the kingdom of Saudi Arabia and Abu Dhabi. It’s already burned through a large portion of its share capital, with investments in more than 80 late-stage tech start-ups.

Stakes are included Uber Technologies Inc. UBER.And WeWork, We, the parents, The Company’s spending spree that has transformed the venture capital industry, as they turned outguns and less-capitalized competitors.

SoftBank does not provide information on how it would fund a $38 billion contribution to the fund. With the consortium, it is not necessary to have all the money all at once, and the fruits of the first Vision, the Fund may be able to be recycled, said an analyst, Dan Baker is on Base.

Such a strategy would rely on the initial fund will continue to provide the exciting results, such as the transitions out of it is to identify and invest in promising start-ups in the management of a portfolio of companies that are listed or are on their way to the public markets.

Ill

To be absent from SoftBank, the list of participants in the new fund, the Goldman Sachs Group Inc’s (GS.(N). The Wall Street Journal on Wednesday, the US-based bank would have to invest in the fund.

SoftBank said that it is talking with potential investors and that the fund expects the capital to grow your business.

Also, being absent from Abu Dhabi, United arab Emirates, including crown prince Mohammed bin Salman, in October, told the international monetary Fund his country would be willing to commit to a further us $45 million.

FILE PHOTO: The logo of SoftBank Group, Corp, is displayed at the SoftBank World in 2017 conference to be held in Tokyo, Japan, on July 20, 2017. (REUTERS photo/Issei Kato/File Photo

“No, the PIF, there will be no SoftBank Vision for the Fund,” he said, referring to the Public investment fund of the kingdom of Saudi Arabia.

The son was later forced to defend the kingdom with the support of the objective of the Fund is, after the Saudi security personnel have been accused of the murder of a local journalist, and critic, Jamal Khashoggi.

SoftBank Group’s share price was little changed in morning Tokyo trade, after the highly-anticipated announcement. The benchmark share price index .N225 was down 0.5%.

Report by Sam Nussey; Additional reporting by Chang-Ran Kim; Editing by David Dolan and Christopher Cushing

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