SoftBank Group Corp is reportedly in talks to acquire the remaining 25% stake in Arm Ltd from Vision Fund 1 (VF1), a $100 billion investment fund. This potential deal could deliver a major windfall to investors, including Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala, who suffered losses from SoftBank’s previous investments. SoftBank’s move comes as it prepares to list Arm on Nasdaq next month at a valuation of $60 billion to $70 billion. If a deal is reached, it would allow SoftBank to sell fewer Arm shares in the IPO, potentially boosting its chances of tapping VF1 investors for capital in the future.
SoftBank in Talks to Acquire Remaining Stake in Arm for Investors’ Windfall
SoftBank Group Corp is reportedly engaging in discussions to acquire the 25% stake in Arm Ltd that it does not already own from Vision Fund 1 (VF1), an investment fund it raised in 2017. This move could potentially deliver substantial profits to VF1 investors, including Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala, who experienced losses from SoftBank’s previous investments in startups such as WeWork and Didi Global. The discussions come as SoftBank prepares to list Arm on Nasdaq next month with a valuation estimated at $60 billion to $70 billion.
Negotiations Could Deliver Immediate Gain for Vision Fund 1 Investors
By acquiring the remaining stake in Arm from VF1, SoftBank would be providing an immediate windfall to VF1 investors who have waited years for strong returns. This is a major incentive for investors who suffered losses from SoftBank’s previous bets on startups that did not perform well. The alternative option of VF1 selling its Arm shares on the stock market following the IPO would take a longer time and carry more risk, as Arm’s shares may drop in value. If a deal is reached, it would be a significant win for VF1 investors and a boost to SoftBank’s reputation.
Shorter Timeframe, Lower Risk: Why SoftBank Prefers Direct Acquisition
Acquiring the remaining stake in Arm directly from VF1 reduces the timeframe and lowers the risk for both SoftBank and VF1 investors. Selling Arm shares in the stock market following the IPO would require a longer time period of at least one to two years due to the size of the stake. Additionally, there is the uncertainty of Arm’s share price dropping post-IPO, which would be riskier for VF1 investors. By negotiating a direct acquisition, SoftBank can provide a faster, more secure monetization option for VF1 investors.
Boosting Chances for Future Investment: SoftBank Eyes Capital from VF1 Investors
Delivering a major windfall to VF1 investors could improve SoftBank’s chances of tapping them for future capital, though the company currently has no plans to do so. The strong returns generated by this potential deal could increase investor confidence in SoftBank and make them more likely to invest in future funds. SoftBank’s CEO, Masayoshi Son, has recused himself from VF1’s deliberations on the matter, ensuring that the fund makes an independent decision in the best interest of its investors. This move demonstrates SoftBank’s commitment to its investors and building long-term relationships.
Arm’s IPO: A Boon for SoftBank and VF1 Amid Quarterly Losses
Arm’s upcoming IPO is anticipated to benefit both SoftBank and VF1, providing a much-needed boost amid consecutive quarterly losses reported by SoftBank. The company has faced declines in the valuations of major holdings, affecting its overall performance. SoftBank originally sold a 25% stake in Arm to VF1 in 2017, and the upcoming IPO would allow SoftBank to sell fewer Arm shares, thus retaining a larger stake in the company. This strategic move positions SoftBank and VF1 for significant gains from the success of the IPO.
SoftBank’s negotiations to acquire the remaining stake in Arm from VF1 have the potential to deliver a major windfall for VF1 investors. By providing immediate returns on their investments, SoftBank is taking a proactive approach to ensure investor satisfaction and build long-term relationships. This deal, coupled with the upcoming IPO, could renew investor confidence in SoftBank and potentially pave the way for future capital investment. As the negotiations progress, the outcome will have significant implications for both SoftBank and VF1 investors, and all eyes will be on the success of Arm’s IPO on Nasdaq.
Analyst comment
Positive news: SoftBank is in talks to acquire the remaining stake in Arm from VF1, potentially delivering a windfall to VF1 investors. This move provides immediate gain and reduces risk for VF1 investors, boosting their confidence in SoftBank. The upcoming Arm IPO could also benefit both SoftBank and VF1, leading to significant gains. This deal and IPO could renew investor confidence in SoftBank and open doors for future capital investment.
