SoftBank Might Split to Focus on Tech

Posted by on Jan 16th, 2018

Masayoshi Son becomes well known thanks to his big bets on companies such as Uber and Alibaba. However, the big move for the billionaire who founded SoftBank could be right in his own back yard.

SoftBank, a telecom company based in Japan that has received a large amount of attention for the aggressive investments it has made in tech companies across the globe, said on Monday that it was contemplating an IPO for its Japanese mobile business.

Selling stock could bring in billions of dollars that Son wants to buy more global tech companies, and should keep a smile on the face of investors.

The announcement by Softbank followed a report in an industry publication in Japan that said the company was planning to raise up to $18 billion during 2018 through the float of 30% of the company in Tokyo and also London. That places a value on the mobile business at $60 million.

An analyst in the industry said that an IPO would ready SoftBank for another round of strong investments.

Of recent, the company in Japan has become much more known for building big in tech companies across the globe.

Some of the big bets by Son have paid off, like its early Alibaba investment. However, others, such as the tens of billions it spent on wireless carrier Sprint and ARM its chip designer in the UK, have cost the company large sums of money.

SoftBank debt ballooned to over 15 trillion yen or $135 billion, which could mean it would be tough to persuade banks to give it money for new investment.

One analyst is predicting that SoftBank would use money raised from an IPO of the company’s mobile business to seed its Vision Fund for a second time.

The first fund, supported by Saudi Arabia, was able to raise more than $100 billion. It invested in startups in the tech world such as FlipKart and Slack.

Some investors have become concerned that shares of Softbank trade cheaply. Its market cap as this time is approximately $90 billion, which is less that the value of its largest stake in Alibaba, which one research firm estimates is worth over $14.7 trillion yen or $133 billion.

The difference in valuation is growth at the mobile business for SoftBank which still contributes a substantial part of the annual revenues with the company, had tailed off, thus fiving investors reasons to become excited.