Saudi-backed SoftBank Vision’s war chest approaches $100bn

SoftBank Group Chairman and CEO Masayoshi Son gestures as he answers questions during a press briefing to announce the company’s financial results in Tokyo. (AFP)
Updated 08 February 2018
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Saudi-backed SoftBank Vision’s war chest approaches $100bn

LONDON: A buying spree by Japan’s SoftBank Vision Fund (SVF), which counts the Kingdom’s Public Investment Fund as its top international backer, was highlighted on Wednesday when the parent company disclosed a 20 percent rise in net profit in the nine months to the end of last December at 1.01trillion yen ($925.2 million).
SVF listed 19 companies where it has holdings, many acquired since the first close of the fund in May 2017 when it unveiled a $93 billion war chest, which has since grown to more than $97.7 billion.
SVF has stakes in Arm Holdings, the UK chip maker, Slack Technologies, the business chat tool, Brain Corporation, the AI-based autonomous driving system developer, and Mapbox, the US geographical information platform, among others.
Affiliated fund, Delta, has only one asset, the Chinese ride-sharing company, DiDi.
Reuters reported on Wednesday that DiDi, which bought out Uber’s China business in 2016, was setting up an electric car sharing service with 12 automakers, including the local partners of Ford and the Renault-Nissan-Mitsubishi alliance.
Didi was quoted as saying it would build an “open new energy car-sharing system” that would allow members to use vehicles on demand through an app-based system.
SVF has invested $27.5 billion during the accounting period in tech companies that also include visual computing company NVIDIA, and co-working company WeWork. Since the end of the reporting period, SVF has acquired a 15 percent stake in Uber for $7.7 billion, and its swelling portfolio has grown to 26 companies.
Parent group SoftBank, which has a controlling stake in US mobile carrier Sprint, confirmed on Wednesday that it had launched preparations for a Tokyo listing of its domestic mobile phone business.
Headed by Japanese billionaire Masayoshi Son, SoftBank repeated that it is interested in buying companies in fields such as robotics, artificial intelligence and consumer technologies as automation gathers pace.
The relationship with the Kingdom will work both ways with Bloomberg reporting in 2017 that SoftBank planned to invest $25 billion in Saudi Arabia over the next three to four years.
At October’s Future Investment Initiative held in Riyadh, PIF and the Vision Fund signed a Memorandum of Understanding to create a ‘Solar Energy Plan 2030’ for the Kingdom.
The new initiative included an agreement to develop Saudi Arabia’s first 3-gigawatt solar generation capacity in 2018. This will take place through the Saudi Electricity Company, which is 74.3 percent owned by PIF.
Additionally, both parties will explore the possibility of the Vision Fund taking a significant minority equity stake in SEC, and work to identify opportunities to establish solar and battery manufacturing ecosystems in the Kingdom, which in turn will support sector diversification and job creation, it was said at FII.
“Rapid technology advancement and scale have transformed solar power into an attractive source of electricity,” said Son.
Son told a financial media conference in Japan on Wednesday, following publication of the latest financial data that group companies such as Arm and Yahoo! Japan were doing well, and he planned to invest in more companies that he called “unicorns.”
One such company he mentioned was Wag, a US venture connecting dog owners with dog walkers online, which Son called the “dog version of Uber.”


Pakistani central bank lifts interest rate as inflation bites

Updated 20 May 2019
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Pakistani central bank lifts interest rate as inflation bites

ISLAMABAD: Pakistan’s central bank raised its key interest rate to 12.25% on Monday, warning that already soaring inflation risked further rises on the back of higher oil prices and reforms required for a bailout from the International Monetary Fund.
The 150 basis points increase follows a preliminary agreement last week with the IMF for a $6 billion loan that is expected to come with tough conditions, including raising more tax revenues and putting up gas and power prices. It was the eighth time the central bank has increased its main policy rate since the start of last year.
With economic growth set to slow to 2.9% this year from 5.2% last year, according to IMF forecasts, the rate rise adds to pressure on Prime Minister Imran Khan, who came to power last year facing a balance of payments crisis that has now forced his government to turn to the IMF.
Higher prices for basic essentials including food and energy has already stirred public anger but the central bank suggested there was little prospect of any immediate improvement.
Noting average headline inflation rose to 7% in the July-April period from 3.8 percent a year earlier, the central bank said recent rises in domestic oil prices and the cost of food suggested that “inflationary pressures are likely to continue for some time.”

 

It said it expected headline inflation to average between 6.5% and 7.5% for the financial year to the end of June and was expected to be “considerably higher” in the coming year. Expected tax measures in next month’s budget as well as higher gas and power prices and volatility in international oil prices could push inflation up further, it said.
It said the fiscal deficit, which the IMF expects to reach 7.2% of gross domestic product (GDP) this year, was likely to have been “considerably higher” during the July-March period than in the same period a year earlier due to shortfalls in revenue collection, higher interest payments and security costs.
Despite some improvements, financing the current account deficit remained “challenging” and foreign exchange reserves of $8.8 billion were below standard adequacy levels at less than the equivalent of three months of imports.
The central bank said it was watching foreign exchange markets closely and was prepared to take action to curb “unwarranted” volatility, after the sharp fall in the rupee over recent days that saw the currency touch a record low of 150 against the US dollar.
Details of what Pakistan will be required to do under the IMF agreement, which must still be approved by the Fund’s board, have not been announced but already opposition parties are planning protests.
As well as higher energy prices that will hit households hard, there are also expectations of new taxes and spending cuts in next month’s budget to reach a primary budget deficit — excluding interest payments — of 0.6% of GDP.
With the IMF forecasting a primary deficit of 2.2% for the coming financial year, that implies squeezing roughly $5 billion in extra revenues from Pakistan’s $315 billion economy, which has long suffered from problems raising tax revenue.

FACTOID

Pakistan’s economic growth is set to slow to 2.9% this year.