2023-08-13 21:00:15
© Reuters.
By Echo Wang and Anirban Sen
NEW YORK (Reuters) – SoftBank Group is in talks to acquire the 25% stake in Arm that it does not directly own from Vision Fund 1 (VF1), a $100 billion investment fund raised in 2017, according to people familiar with the subject, in what would be a win for investors who have waited years for strong returns.
The discussions come as Softbank (TYO:) prepares to list the chipmaker on the market next month, with a market value of $60 billion to $70 billion.
If the parties reach an agreement, the Japanese technology investment house would be delivering a large and immediate windfall to VF1 investors, including Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala. They suffered losses after many of Softbank’s bets on startups such as coworking network WeWork and transport app company Didi Global failed.
The alternative — letting VF1 sell its Arm shares on the stock market over time after the initial public offering (IPO) — would normally take at least a year or two, given the size of the stake. It would also be riskier for the fund’s investors, as it’s possible for Arm’s shares to drop after the IPO.
A big windfall for VF1 investors could increase SoftBank’s chances of raising capital again in the future. He is considering raising a third Vision Fund.
It was not possible to know the exact valuation of Arm that the two sides are discussing for the transaction, and the sources warned that it is possible that no agreement will be reached.
If a deal goes through, SoftBank would sell fewer Arm shares in the IPO and likely retain an 85% to 90% stake, according to the people, who asked not to be named because the talks are confidential.
SoftBank, VF1 and Arm declined to comment.
(Reporting by Echo Wang and Anirban Sen in New York)
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