Talks have been revived for SoftBank to take itself private amid a series of disappointments to the company’s equity valuation compared to the value of its individual holdings, Financial Times (FT) writes.
The company has seen numerous big asset disposals lately, and yet its $115 billion equity valuation continues even after a recent asset sale program to close the gap between the company and its holdings’ valuations.
The last disposal is planned to be announced this week, as SoftBank will sell U.K.-based Arm Holdings for over $40 billion in cash-and-stock to Nvidia, the U.S.-based chip maker. As a result, SoftBank will now be the largest stakeholder in Nvidia, which will add to the conglomerate’s holdings in minority stakes, including one in Alibaba and another in SoftBank’s listed Japanese telecom unit.
There’s also the fact that the company sees itself differently than it once did, now defining itself more as an investor and asset manager rather than as a business operator as it always had done prior.
And there’s also been a glut of wider scrutiny against the company’s forward-thinking bets on U.S. stocks, which saw SoftBank acquiring a new nickname as the “Nasdaq Whale” for its over-sized equity options trades. That was another sign that becoming a private company could be a lucrative option, FT writes.
Sources say the chances of the company going private are low due to the overall high status symbol of a company being listed in Japan. But founder Masayoshi Son's frustrations with share prices still endear him to the possibility.
SoftBank participated in almost $4 billion in purchases of tech shares, including for Amazon, Microsoft, Netflix and Tesla. The purchases managed to boost the stock market at the time, though the financial uncertainty of the pandemic didn't keep those numbers going throughout the summer.
SoftBank’s Vision Fund was looking to grow in size earlier this year, with a quest to raise $10 billion to boost portfolio companies ailing because of the pandemic. The company was looking to investors for another $5 billion, intending to match that. But the pandemic’s fiscal constraints on much of the world made that a difficult proposition.