Exclusive: SoftBank in talks to buy Vision Fund’s 25% stake in Arm -sources

Exclusive: SoftBank in talks to buy Vision Fund’s 25% stake in Arm -sources

SoftBank Group Corp (9984.T) is currently in discussions to acquire the remaining 25% stake in Arm Ltd from Vision Fund 1 (VF1), a $100 billion investment fund it raised in 2017. This potential deal could bring strong returns for investors who have been waiting for a long time. The chip designer is also preparing to list on Nasdaq next month with a valuation of $60 billion to $70 billion.

If the negotiations are successful, VF1 investors, including Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala, would receive an immediate windfall. This would be a significant outcome considering the losses they incurred from SoftBank’s previous investments in startups like WeWork Inc and Didi Global.

Selling Arm shares in the stock market after the IPO would be a riskier and lengthier process for VF1. It could take one to two years to sell the stake, and there is a possibility of a drop in Arm’s share price. However, VF1 returned to profitability in the latest quarter due to the increased value of AI-focused startups in its portfolio. This success could potentially attract investors for SoftBank’s future Vision Fund endeavors.

SoftBank’s CEO, Masayoshi Son, has hired investment bank Raine Group to advise on the negotiations. Son has recused himself from VF1’s decision-making process to ensure that the fund acts independently in the best interest of its investors. The negotiations are being handled by VF1’s investment committee and SoftBank’s investment advisory board.

The exact valuation for the Arm transaction is unknown, and there is a possibility that no agreement will be reached. If a deal is made, SoftBank would sell fewer Arm shares in the IPO and retain a stake of around 85% to 90%.

Arm’s IPO would not only benefit VF1 but also SoftBank, which has reported consecutive quarterly losses. SoftBank initially acquired Arm for $32 billion in 2016 and sold a 25% stake to VF1 for $8 billion in 2017. SoftBank has also been in talks with technology companies like Amazon.com Inc to bring them on board as cornerstone investors in Arm.

SoftBank’s Vision Fund 1 delivered a gain of $12.4 billion on $89.6 billion of investments, while Vision Fund 2 suffered a loss of $18.6 billion on $51.8 billion of investments. SoftBank has been in “defense mode” since May 2022 but plans to shift to “offense” mode due to advancements in AI.

Arm’s IPO preparations began after the collapse of a deal to sell the company to Nvidia Corp for $40 billion. The IPO could potentially raise up to $10 billion. Arm’s business model of licensing designs has helped it fare better than the broader chip industry, despite recent weakness in smartphone demand.

The negotiations are being reported by Echo Wang and Anirban Sen, with editing by Greg Roumeliotis and Mark Porter.

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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