On Monday, the Japanese conglomerate revealed plans to raise over half a billion dollars in New York through an initial public offering of a special purpose acquisition company (SPAC).
The newly created firm, SVF Investment Corp., plans to list on the Nasdaq under ticker symbol “SVFAU.” It will initially seek to raise $525 million, but that could go up to nearly $605 million if there’s strong interest in the shares.
SVF is sponsored by a subsidiary of SoftBank Investment Advisers, which oversees the Vision Fund — SoftBank’s vehicle for many of the company’s splashy tech investments.
Back on offense
The announcement is yet another signal that
SoftBank (SFTBF), led by Japanese billionaire Masayoshi Son, is ready to jump back on the offense after working this year to raise cash during the coronavirus pandemic.
After a
string of embarrassing losses, Son forced the firm to hunker down. The company said last month that it had sold off
nearly $100 billion in assets throughout the financial year, including
$14 billion worth of shares in its Japanese mobile carrier and a
$40 billion sale of British chipmaker ARM. The latter is still pending regulatory approval.
But that strategy is changing.
Earlier this year, SoftBank reportedly
bought $4 billion worth of options tied to underlying shares it had earlier purchased in tech firms like Amazon, Microsoft and Netflix. While those bets didn’t appear
to pay off, they did signal that Son was ready to start taking risks again.
This month, SoftBank bought into another new venture, investing about $780 million
into Sinch, a Swedish telecoms and cloud services provider.
SoftBank has confirmed that it wants to use its SPAC to make a purchase. In a filing Monday with the
US Securities and Exchange Commission, the new company said that it would look for a potential target somewhere “broadly across the technology landscape,” which could include anything from artificial intelligence and fintech to semiconductors and robotics.
It noted that it would not rule out the possibility of buying a company SoftBank has already invested in, saying that it was “not prohibited” from pursuing such a deal. In that event, the firm said it would consult an independent party to ensure that that “is fair to our company from a financial point of view.”
SPAC mania
SoftBank is the latest big name to hop on the SPAC bandwagon. So far in 2020, $75.4 billion has been raised through the IPOs of US-listed SPACs, according to data provider Refinitiv.
That’s a huge jump from 2019, when such firms only raised $13.1 billion.
A slew of major companies have recently chosen to take the same route, including
Playboy,
DraftKings, and electric vehicle startups
Nikola and
Arrival. Billionaire business leaders such as
Richard Branson and
Peter Thiel have gotten in on the action, too.
But
some fear these deals are getting out of hand, and could be an ominous signal of misplaced market euphoria.
Tech stocks have also
popped this year. The tech-heavy
Nasdaq Composite (COMP), for example, has soared 42% so far in 2020.
SoftBank itself alluded to the momentum in its prospectus, saying it had been encouraged to join in after watching the space heat up.
“Over the last 18 months, we have seen significant growth in public market investors’ interest in top-quality companies operating in technology-enabled sectors,” the company said. “To that end, we believe launching a blank check company now gives us the opportunity to maximize value for our investors.”
— Matt Egan and Charles Riley contributed to this report.
