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Softbank to sell off nearly $8 billion in Alibaba shares

SoftBank

Japanese conglomerate SoftBank Group (SBG) has announced that it will sell at least $7.9 billion of its stake in the Chinese e-commerce company Alibaba to reduce its debt. This transaction would reduce SoftBank’s ratio of net debt to EBITDA to 3.3 times, from 3.8 at the end of March.

SBG had first invested in Alibaba in 2000 and owned 32.2% stake in the company. The stake will be brought down to 28% now, although SBG claims to still remain Alibaba’s largest stockholder.

As per terms of the deal:

  • Alibaba will buy back ordinary shares worth $2 billion.
  • An additional $400 million worth of shares will be sold to the members of Alibaba Partnership which consists of senior executives and founders.
  • Separately, shares worth $500 million would be sold to a major sovereign wealth fund.
  • Another $5 billion will be offered to institutional buyers, along with the option to buy up to an additional $1 billion in securities.

SBG also stated that it will enter into a lockup agreement with Alibaba under which it has agreed not to transfer any Alibaba shares held by it for a period of six months, subject to certain exceptions.

Masayoshi Son, Chairman and CEO of SBG and Jack Ma, Executive Chairman of Alibaba will remain on the board of each other’s companies.

Singapore will own Alibaba shares worth $1 billion

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In a separate release, Alibaba said it sold shares worth $500 million each to subsidiaries of Singapore’s GIC and Temasek Holdings. The private placements to GIC and Temasek were priced at $74.00 per share.  The transactions were made according to the SoftBank’s offering of mandatory exchangeable trust securities of Alibaba American depository shares, which amounts to $5.5 billion.

 

Past investments in India

– In August 2015, e-commerce platform Snapdeal had raised $500 million from Alibaba, Apple iPhone maker Foxconn and existing investor Softbank. In October 2014, Softbank had invested $627 million in Snapdeal.

– Earlier that same month, Branded budget hotel rooms service OYO Rooms had raised $100 million in a funding round led by SoftBank group.

– In October 2014, SoftBank Internet and Media Inc (SIMI) of SBG had announced that it will lead an investment of $210 million into Olacabs.

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Image Credits: Flickr user Yumi Kimura

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