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SoftBank is reportedly looking into a plan that would use two of its assets — its ownership in British semiconductor company Arm Holdings and Uber — as collateral to take on loans that SoftBank could then use to invest more money in tech.
It’s a risky plan, since it depends on the value of the company’s holdings in Arm and Uber to not tank. But SoftBank’s chief executive Masayoshi Son has had no qualms about taking on mountains of debt in order to finance expansion. And he is nothing if not cocksure in his ability to see the future.
Son, who manages a $100 billion technology fund that has rocked the venture capital industry over the last year, has claimed a need for up to $880 billion in cash to finance his ambitions. Recode reported in October that SoftBank was in talks to raise a second so-called Vision Fund, which is expected to be even larger than the first fund.
Arm designs the microchip that is in the iPhone and was bought by SoftBank for $32 billion in 2016. SoftBank just this month acquired a 15 percent stake in Uber, which has lost more than $1 billion two quarters in a row.
It’s unclear why SoftBank would need what The Information reports is about $5 billion in loans — the Vision Fund still has tens of billions of committed capital that it has not yet invested ($81 billion as of Sept. 30, to be exact). SoftBank declined to comment on the report.
“We are always studying various capital strategy options,” the company told Recode.
SoftBank’s Vision Fund is moving quickly through its war chest — its $9 billion investment in Uber, finalized this month, plus its roughly $8 billion purchase from SoftBank proper for a 25 percent stake in of Arm. Other deals have been much smaller.
Son, who claims to have already bagged $3 billion in profit from the Vision Fund’s investments, is not wanting for cash. The Vision Fund, which is financed not just by Son’s mother ship but also heavily by the sovereign wealth funds of Saudi Arabia and Abu Dhabi, is expected to draw on more traditional funders in the future, like pension funds and insurance companies.
Plus, the original funders are likely eager to reinvest. The Saudi government’s oil company, Aramco, is soon expected to publicly list its stock in what would be the largest IPO ever. The Saudis, driven to diversify their economy away from oil, could then invest some of that windfall back into another Vision Fund.
But if SoftBank needs money right this instant — perhaps to complete the deal in advance of a U.S. regulatory holdup — then there are crazier moves than using the stock as collateral. Love him or hate him, Masa Son is nothing if not creative.
This article originally appeared on Recode.net.
