Reuters, citing the companies, reported that the investment is coming from the SoftBank’s $100 billion Vision Fund. Reuters noted it’s one of the fund’s biggest investments in self-driving technology. Cruise, as a result of the investment, has an $11.5 billion valuation. GM’s Chief Executive Officer Mary Barra said the vehicle manufacturer is on track to start rolling out Cruise AVs in commercial ridesharing fleets next year and that it will launch its own ride and delivery services business. She also said the company could look for other opportunities with some of the SoftBank funded companies that include Uber, Didi, Ola, and Grab. GM plans to invest $1.1 billion in Cruise once the deal with SoftBank closes, the report noted.
SoftBank Vision Fund will own a nearly 20 percent stake in GM Cruise once the deal closes and will have one of six seats on the board. Reuters noted GM’s investment will be held in a preferred security, which can be converted to GM common stock in seven years. Initially, SoftBank said it will invest $900 million and an additional $1.35 billion when Cruise vehicles are ready for deployment. Starting in the second quarter GM will report Cruise financials on a standalone basis.
The investment in GM’s Cruise unit comes as Warren Buffett confirmed that he held talks with Uber, with reports saying that his company, Berkshire Hathaway, offered Uber a $3 billion investment earlier this year. Buffett told CNBC, “I’m a great admirer of [Uber CEO Dara Khosrowshahi]. Some of the reported details are not correct, but it’s true that Berkshire had discussions with Uber.”
Buffett’s comments were in response to a Bloomberg report, that said that Berkshire had offered Uber a $3 billion investment. However, talks fell through over the terms and size of the deal. Uber also, reportedly, tried to talk Buffett into a smaller stake. Buffett’s offer came shortly after Japanese investment firm SoftBank secured its own stake in the ridesharing company late last year. Shares tendered as part of the deal were equal to 20 percent of Uber’s total value. Softbank was expected to keep its stake at 15 percent, giving Uber a $48 billion value, which is approximately 30 percent lower than the company’s valuation of close to $70 billion.