After the Japanese investment behemoth reported a record $23 billion loss, speculation that SoftBank Group Corp. (TYO:9984) would be better off as a private firm has returned.
SoftBank Group Corp. (TYO:9984)
Over the past ten years, SoftBank Group (TYO:9984) has rapidly transformed from a telecom business and strategic investor to the largest source of innovation funding worldwide. As it continues to repurchase its stock and sell or downsize its holdings, including its interest in Alibaba Group Holding Ltd. (HKG:9988), it will appear even more like a pure investment house.
SMBC Nikko analyst Satoru Kikuchi wrote that there is little reason to be listed on the stock market. Nikko added they think changes in the very form of the company, for example, an MBO, could be coming in the not-too-distant future.
Masayoshi Son, the creator of SoftBank Group (TYO:9984) and its largest shareholder with a holding close to 28 % as of the end of March, has been debating the concept of going private with his inner circle for at least five years. According to Bloomberg News, when SoftBank’s stock dropped in 2020 at the start of the coronavirus epidemic, he started talking to advisors and lenders such as Elliott Management Corp. and Mubadala Investment Co. of Abu Dhabi.
After Son revealed his plans to sell $43 billion worth of assets to reduce debt and repurchase stock, this rumor was put to rest. The billionaire is now focused on having chip component Arm Ltd. publicly listed, a historic deal that might restore SoftBank’s credibility in the struggling global tech industry. In February 2020, the billionaire stated that he believed SoftBank Group (TYO:9984) would be better suited as a public corporation.
To increase the value of its stock, the corporation has made several significant buyback commitments in recent years. In addition to a plan to buy back up to 1 trillion yen of its stock until September, it announced this week that it would purchase up to 400 billion yen ($3 billion) of its shares. Comparing its stock price to the little altered benchmark Topix index, it has declined by nearly 23% since last year.
Featured Image: Megapixl @Andreistanescu
