SoftBank To Sell $14 Billion Of Its Asset Again In Its Drive To Prop Up Cash Reserves

In its efforts to protect itself from possible future waves of the coronavirus pandemic,  billions more in cash by selling assets is being raised by one of the biggest tech investors of tee world – SoftBank.

It is now set to sell down its stake in its Japanese mobile carrier affiliate, SoftBank Corp, said Masayoshi Son’s SoftBank Group on Friday.

More than one million shares in SoftBank Corp, which is worth a total of 1.47 trillion yen (nearly $14 billion), will be sold by it, SoftBank said. The process of sale of a part of the stock will result in SoftBank Group’s stake in the carrier company getting reduced to about 40 per cent form about 62 per cent.

SoftBank Group shares closed down 3 per cent in Tokyo on Friday.

The company has chosen to continue with the sale even as the global markets, which had been hit significantly by the novel coronavirus pandemic earlier this year, have recovered from the lows. For example on Wall Street, stocks of tech companies are constantly hitting record highs, resulting in the personal wealth of their founders ballooning.

But the “ongoing uncertainty in the market environment due to concerns about a potential second or even third wave of Covid-19”, noted SoftBank in its statement announcing the stake sale.

Back in March this year, plans to raise some 4.5 trillion yen ($43 billion) by selling some of its assets and investments was made by the company. At the top of the list of assets that it wants to sell off is that of the mobile carrier.

SoftBank Group “believes it is necessary to expand cash reserves beyond [that amount] to ensure flexible options to respond to changes in the market environment,” the company said Friday.

The announcement by the company of asset sale in March was a surprise for the market because it marked a change in the strategy for SoftBank and its founder and CEO Son – marking a step back from his high-risk style of investing.

But the sweeping restrictions on work, travel and social interaction introduced during the pandemic to try and slow down the spread, wreaked havoc on his global investments such as Uber and WeWork.

By selling its stake in US carriers Sprint and T-Mobile in a deal worth about $22 billion, managing to get $14.7 billion in financing against the stocks of Alibaba that it owned shares and the sale off of $3 billion worth of shares in its carrier company had helped the company to already achieve the vast majority of the original cash target, Son said during an earnings presentation earlier this month.

(Adapted from CNN.com)



Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability, Uncategorized

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