Saudi-backed SoftBank to ramp up tech investment

A Softbank branch in Tokyo. The company plans to invest as much as $25 billion in Saudi Arabia in the next three to four years. (Reuters)
Updated 20 June 2018
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Saudi-backed SoftBank to ramp up tech investment

  • SoftBank CEO Masayoshi Son to step up company's "unicorn hunting" investment strategy
  • Saudi Arabia's PIF has contributed $45 billion to SoftBank's Vision Fund

LONDON: Japanese conglomerate SoftBank will double down on its ambitious tech investment strategy, in a move that could create opportunities for further collaboration with Saudi Arabia’s Public Investment Fund (PIF).
SoftBank — which owns Japan’s third-largest telecoms operator — has emerged in recent years as one of the world’s largest tech investors, acquiring stakes in companies including Chinese e-commerce giant Alibaba, and UK chipmaker ARM Holdings.
It last year launched the $100 billion Vision Fund, boosted by a $45 billion investment from PIF. It attracted $93 billion in funds last year, aided by contributions from Abu Dhabi’s Mubadala Investment Company, Apple, Foxconn and others, making it the world’s largest buyout fund.
The Vision Fund has invested in disruptive firms, especially those in the technology space, including Swiss pharmaceuticals startup Roivant, office space company WeWork, and enterprise messaging service Slack.
CEO Masayoshi Son signaled that such dealmaking will become even more of a focus for SoftBank.
“I have spent 97 percent of my time on managing the telecoms business and only 3 percent on investing,” he told investors at the group’s annual meeting on Wednesday, Reuters reported.
Reversing that balance will allow SoftBank to grow faster, he said.
Son’s comments fit with a transformation underway at SoftBank from a domestic telecoms firm to “unicorn hunter” — as Son termed it — focusing on late-stage startups around the world.
Last month, SoftBank invested $2.25 billion in GM Cruise, the carmaker’s autonomous vehicle unit, complementing its shareholdings in China’s Didi Chuxing, the world’s largest ride-sharing app, as well as rivals Uber, Grab and Ola.
The Vision Fund will initially invest $900 million in GM Cruise Holdings, investing the remaining $1.35 billion when GM’s Cruise AVs are ready for commercial deployment. The investment gives the Vision Fund a 19.6 percent stake in GM Cruise.
Saudi Arabia’s PIF has been key to SoftBank’s tech investment strategy with its contribution to the Vision Fund, with the Kingdom also benefiting directly from partnerships with SoftBank.
Son said in November that SoftBank planned to invest as much as $25 billion in the Kingdom in the next three to four years, and aimed to deploy up to $15 billion in Neom, a futuristic city to be built on the Red Sea coast.
PIF and the Vision Fund in March announced a partnership to build the world’s largest solar project in Saudi Arabia, with a capacity of up to 200 gigawatts, in line with the Kingdom’s solar ambitions as set out in Vision 2030.
The agreement will establish an electricity generation company in Saudi Arabia, and will commission two solar plants with a capacity of 3GW and 4.2GW by the end of next year. It envisages localizing a significant portion of the renewable energy value chain in the Saudi economy, including research and development and the manufacturing of solar panels.
SoftBank shareholders on Wednesday approved the appointment of three executive vice presidents — SoftBank unit Sprint Corp’s former chief executive, Marcelo Claure, and former bankers Katsunori Sago and Rajeev Misra.
Bolivian-born billionaire Claure was appointed SoftBank’s chief operating officer in May, tasked with driving cooperation between the group’s portfolio companies. Former Goldman Sachs executive Sago became chief strategy officer on Wednesday and will focus on group investment. Misra runs the Vision Fund.
Son yesterday bemoaned the so-called conglomerate discount weighing on SoftBank’s shares at its investor meeting.
He said when the market value of stakes the firm holds in companies such as Alibaba Group Holding and ARM Holdings are taken into account, SoftBank’s shares should be trading above 14,000 yen ($127), rather than about 8,000 yen currently.


German industry groups warn US on tariffs before Trump-Juncker meeting

Updated 22 July 2018
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German industry groups warn US on tariffs before Trump-Juncker meeting

  • Washington imposed tariffs on steel and aluminum imports from the EU, Canada and Mexico on June 1
  • Trump is threatening to extend them to EU cars and car parts

BERLIN: German industry groups warned on Sunday, before European Commission President Jean-Claude Juncker meets US President Donald Trump this week, that tariffs the United States has imposed or is threatening to introduce risk harming America itself.
Citing national security grounds, Washington imposed tariffs on steel and aluminum imports from the EU, Canada and Mexico on June 1 and Trump is threatening to extend them to EU cars and car parts. Juncker will discuss trade with Trump at a meeting on Wednesday.
“The tariffs under the guise of national security should be abolished,” Dieter Kempf, head of Germany’s BDI industry association said. Juncker should tell Trump that the United States would harm itself with tariffs on cars and car parts, he told Welt am Sonntag newspaper.
The German auto industry employed more than 118,000 people in the United States and 60 percent of what they produced was exported. “Europe should not let itself be blackmailed and should put in a confident appearance in the United States,” he added.
German Economy Minister Peter Altmaier told Deutschlandfunk radio on Sunday he hoped it was still possible to find a solution that was attractive to both sides. “For us, that means we stand by open markets and low tariffs,” he said
He said the possibility of US tariffs on EU cars was very serious and stressed that reductions in international tariffs in the last 40 years and the opening of markets had resulted in major benefits for citizens.
EU officials have tried to lower expectations about what Juncker can achieve, and played down suggestions that he will arrive in Washington with a novel plan to restore good relations.
Altmaier said it was difficult to estimate the impact of any US car tariffs on the German economy, but added: “Tariffs on aluminum and steel had a volume of just over six billion euros. In this case we would be talking about almost ten times that.”
He said he hoped job losses could be avoided but noted that trade between Europe and the United States made up around one third of total global trade.
“You can imagine that if we go down with a cold in the German-American or European-American relationship, many others around us will get pneumonia so it’s highly risky and that’s why we need to end this conflict as quickly as possible.”
Eric Schweitzer, president of the DIHK Chambers of Commerce, told Welt am Sonntag the German economy had for decades counted on open markets and a reliable global trading system but added: “Every day German companies feel the transatlantic rift getting wider.”