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SoftBank to create a mega fund of $100B along with Saudi Arabia and others


Japanese conglomerate SoftBank Group said that it is creating a new fund to invest as much as $100 billion in the technology sector globally over the next five years. The fund, tentatively termed SoftBank Vision Fund, will see participation from Saudi Arabia’s  Public Investment Fund and will be managed by the company’s UK subsidiary.

“In addition, a few large global investors are in active dialogue to join SBG and PIF to participate in this Fund,” the company said in press release. SoftBank and Saudi Arabia have signed a non-binding memorandum of understanding for the same (MoU).

SoftBank will be investing $25 billion while Saudi Arabia may potentially invest $45 billion. The total size of the investment fund is expected to grow to $100 billion with other investors participating.

Rajeev Misra, Head of Strategic Finance, SoftBank Group, is leading the Fund project. SoftBank has also engaged former Deutsche banker Nizar Al-Bassam and ex-Goldman partner Dalinc Ariburnu for the project.

SoftBank has made tens of billions on investments it made in Chinese ecommerce giant Alibaba and Yahoo. Most recently in July, the company sold at least $7.9 billion of its stake in the Chinese e-commerce company Alibaba to reduce its debt. The companyhad first invested in Alibaba in 2000 and owned 32.2% stake in the company. The stake was brought down to 28% now, although SBG claims to still remain Alibaba’s largest stockholder.

Investment in ARM technologies

SoftBank has also made a $32 billion bet by investing in UK-based chip designer ARM Holdings in June. ARM currently designs various processors under the ARM architecture that are used in embedded systems, smart TVs, smartwatches, tablets, laptops, mobiles, servers and even some supercomputers. The company also owns the Mali line of GPUs that are used in most Android tablets as well as on some smartphones. Rather than make its own chips, the company licenses its architecture for other manufacturers to create processors, including manufacturers like Apple, Nvidia and Qualcomm.

Investments in India

SoftBank has been instrumental in the Indian startup and technology space and has been investing in several marquee companies over the last few years. A look at some of them.

– 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.

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