Nikesh Arora, SoftBank Group’s president and chief operating officer is stepping down from his position shortly after being given a clean chit regarding allegations that he was compensated by private
equity firm Silver Lake for helping with potential technology company investments that were similar to the investments he made for SoftBank.
The Wall Street Journal said that Arora will remain as an adviser to the firm, which a Softbank spokesperson has confirmed independently to MediaNama.
Arora confirmed the development via Twitter.
No! Arora departs after doing what he promised and Masa wanting to be CEO for longer. :). Arora for clean chit. https://t.co/nthM0l65c3
— Nikesh Arora (@nikesharora) June 21, 2016
Arora added that SoftBank founder Masayoshi Son wanted to continue as CEO for 5-10 years more. Son had publicly said in June 2015 Arora will be the CEO of the group once he retires. The WSJ report added that Ron Fisher (a SoftBank board member) and Alok Sama (CFO of SoftBank International) will fill Arora’s role in directing overseas investments.
In March, SoftBank Group split into two organizations which would look into domestic and global operations. Arora was made the CEO of the global operations. The investment securities of global subsidiaries and affiliates such as Starburst Ⅰ, Inc. (a holding company that holds the shares of Sprint Corporation) and Alibaba Group Holding Limited would be transferred to the global operations management company.
Masa 2 continue 2 be CEO for 5-10 years, respect that. Learnt a lot. Clean chit from board after through review. Time for me to move on.
— Nikesh Arora (@nikesharora) June 21, 2016
In a separate tweet, he confirmed that he has sold his shares in SoftBank.
Done. https://t.co/3mUjfZHtzv
— Nikesh Arora (@nikesharora) June 21, 2016
Ecommerce marketplace Snapdeal and taxi booking app Ola were Arora’s first investments in India, but in particular, he also got flak for his investment in Housing.com. His other investments in India include Oyo Rooms, Grofers and Hike. The letter from a group of investors, dated January 20 which was not made public, had questioned Arora’s “poor investment performance” including SoftBank’s investment in Housing.
Also read: SoftBank results: How Snapdeal, Ola and OYO Rooms fared in Q4 2015-16
Softbank’s Investments in India and recent developments
– Snapdeal: In August 2015, ecommerce marketplace Snapdeal raised $500 million in funding led by Foxconn, Alibaba and existing investor Softbank, with participation from other existing investors Temasek, BlackRock, Myriad and PremjiInvest.
A report from FactorDaily highlighted a conflict of interest and said that Arora had also invested in his personal capacity and picked up 5% of the shares in Snapdeal. This was in Ocotber 2014, when Snapdeal had raised $627 million.
– Housing.com: In January 2016, Housing raised a fresh round of funding of around $15 million (Rs 100 crore) from Softbank, its largest investor. Housing had previously raised $90 million from Softbank in December 2014, with participation from Falcon Edge and other unnamed investors. At the time the company was valued at Rs 1,500 crore.
Housing was a problem child, and Arora’s performance as an investor came up for scrutiny from Softbank shareholders. Since the tumultuous exit of Housing’s founder Rahul Yadav as CEO in July 2015 and subsequent restructuring in the company, Housing’s valuation has fallen to about $50 million. Housing also cut its headcount significantly after it came under new management.
– Oyo Rooms: In the same month, branded budget hotel rooms service OYO Rooms raised $100 million in a funding round led by SoftBank group and participation from existing investors Greenoaks Capital, Sequoia Capital and Lightspeed India.
– Inmobi: in September 2011, $200 million, at that time,the largest amount of funding raised by an Indian company.
– Grofers: In November 2015, hyperlocal delivery service provider Grofers raised $120 million in a round of funding from SoftBank, Russian entrepreneur Yuri Milner, with participation from existing investors Tiger Global and Sequoia Capital. In January, Grofers shut down its services in 9 cities citing low acceptance. The company had expanded to these Tier II cities, including Ludhiana, Bhopal, Kochi, Coimbatore and Visakhapatnam in September 2015. Grofers will now operate in 17 cities.
– Ola: In November 2015, online cab aggregator Ola raised Series F funding worth $500 million from Baillie Gifford, Falcon Edge Capital, Tiger Global, SoftBank Group, DST Global and China’s Didi Kuaidi. In September 2015, Ola raised raised $225 million in funding from existing investors and new investors. At this time, Tiger Global invested Rs 296.9 crore, Softbank Rs 384 crore, Falcon Edge Rs 514.7 crore, while the others contributed less than Rs 25 crore each.
– Bharti Softbank: A joint venture between Bharti (Airtel) group and Softbank, BSB has had a few misses. It has a messenger called Hike, a gaming division called TinyMogul.
Suggested reading: Here’s why Nikesh Arora is leaving SoftBank from ET Tech.
Full statement from SoftBank regarding Arora’s exit here.
We’re updating this breaking story with more information
