Investments

Investors Balk At SoftBank’s New $100B Tech Fund

SoftBank’s attempt to raise money for a second large investment fund is running into trouble, with some of the biggest money managers in the world showing little interest.

The Wall Street Journal, citing people familiar with the matter, reported that SoftBank has made initial overtures to the money managers in an effort to raise $100 billion for a tech fund geared toward startups. Several of the investors have decided to make small investments or none at all, reported Reuters. Some of those investors include Canada Pension Plan Investment Board and Saudi Arabia’s Public Investment Fund. Combined, their $45 billion funded a lion’s share of SoftBank’s first vision fund. People close to the matter told The Wall Street Journal many of the investors have their own funds geared toward startups and don’t want to pay fees to invest in a fund run by SoftBank.  Other smaller investors who are interested in the fund told Reuters that getting access to deals trumps any concerns about governance and transparency. They say they are making a bet on SoftBank CEO Masayoshi Son.

Softbank disagreed with the Reuters report, telling the news agency said that it’s “misleading and even inaccurate” that investors aren’t interested in its second fund. Still, The Wall Street Journal reported SoftBank recently hired Cantor Fitzgerald to sell the fund and recently contacted investors with offers of $50 million or less. One of the sources told Reuters SoftBank didn’t sign off on the smaller commitments. The idea to have feeder funds with lower investment commitments has been scrapped as well, noted the report.  SoftBank’s first tech fund had a dozen big investors. If it accepted smaller investments it would be a departure, and typically means the fund is having a tough time drumming up interest.

The report noted that Cantor is also putting SoftBank in front of bigger institutional investors.  Meetings last week in Singapore were with investors, noted Reuters. The meeting was described to Reuters as constructive, but that seeking big investors has just kicked off, reported The Wall Street Journal.

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