PARIS — Softbank is poised to sell 25 percent of ARM — roughly $8 billion — to a new, Saudi-backed $100 billion investment fund, the Financial Times reported today. The Japanese shelled out $32 billion to purchased ARM only six months ago.
Softbank CEO Masayoshi Son at the time of its ARM acquisition announcement in July, 2016 (Source: Softbank)
The move is likely to guarantee greater influence for Mubadala, an Abu Dhabi state-backed investment group, in the global semiconductor industry. Mubadala, which owns 100 percent of Globalfoundries, reportedly wanted the $100 billion Vision Fund to own a portion of ARM. $100 billion Vision Fund
Japan’s Softbank announced last fall an ambitious plan to create the Softbank Vision Fund — a financial vehicle that would allow CEO Masayoshi Son to invest in the technology sector globally. The Fund, set up to raise $100 billion, aims to become “one of the world’s largest of its kind
,” said Softbank last year.
While Softbank expects to pump at least $25 billion into the fund over the next 5 years, its biggest investor is Saudi Arabia’s Public Investment Fund, which last year committed to contribute up to $45 billion. The deal is the fruit of long negotiations between Son and Mohammed bin Salman, Saudi Arabia’s deputy crown prince.
In order to hit the Vision Fund’s self-imposed $100 billion target, Son reportedly wanted to secure the backing of Mubadala. The Financial Times reported, Softbank and Mubadala “are closing in on an agreement that would see Mubadala commit $15 billion to the fund.”
In response to Mubadala’s keen interest in ARM, Son is selling a quarter of Softbank’s $32 billion stake, which will cover a portion of SoftBank’s $25 billion fund contribution.
Although on a smaller scale, a number of companies including Apple, Qualcomm, Oracle founder Larry Ellison and Foxconn are reportedly planning to invest in the fund.
It remains to be seen, however, how much controversy Son’s plan to sell a portion of ARM to the sheiks of Araby might generate in the investment community.
One thing is for sure.
Because the scale of the new fund is unprecedentedly large, the Vision Fund will get much more scrutiny from the financial and tech communities. The Financial Times estimated the fund as “equal to all the money raised by the U.S. venture capital industry in the past 30 months.”
Meanwhile, now that the Vision Fund consists of diversified investors including Mubadala, Son’s plan to leverage the fund to pick his investment targets might get more complicated. Son will no longer be risking only his own neck when he makes bets on his big “crazy idea.”
— Junko Yoshida, Chief International Correspondent, EE Times