The Japanese company could get as much as a 5 percent stake in Wirecard, and American depositary receipts reacted positively to the news. SoftBank has added financial advisors, and is putting together a deal to get bonds that can be changed into Wirecard shares. If the deal goes through, it could be announced as early as this month.
An injection of capital by SoftBank could help to restore confidence in Wirecard after a series of reports alleging financial malfeasance. Wirecard’s market cap was cut 25 percent, or about $17 billion, following the news. Wirecard denied that it committed any of the alleged accusations, and said an internal investigation by a law firm proved that it was innocent.
The accusations centered around an accounting exec in the Singapore office, but Wirecard said that individual left the company. German financial regulator BaFin banned Wirecard from trading for two months, and only lifted the restriction in the last week.
The investment from SoftBank would help to expand Wirecard’s reach in Asia, and could help Wirecard get business from SoftBank affiliated companies, like Uber, or other firms affiliated with the Vision Fund.
“It could potentially be quite savvy for them to invest via a convertible structure because they protect their downside with the bond, yet still have [an] upside, should the business perform well in the future,” said Rob Chandra, a general partner at Avid Park Ventures. “We are in the early innings of a massive global shift to electronic payment processing. If Wirecard’s issues are behind them, then this could be a smart investment.”
SoftBank’s Vision Fund has altered the startup ecosphere, and it’s currently in discussions to add another $15 billion in value to its current $100 billion in capital. The Vision Fund has invested an upward of $70 billion in tech companies over the past two years.