SoftBank is closing the first round of investment in its $100 billion Technology Vision Fund by the end of this month, people familiar with the matter have said. The initial investments will likely include $45 billion from Saudi Arabia and $25 billion from SoftBank, as well as $1 billion each from Apple Inc., Qualcomm Inc. and Oracle Corp. Chairman Larry Ellison, they said. The initial round is likely to exceed $80 billion and the timing of the closing may still change, said one of the people. One of the leading marketing and investment spins on the fund is that it will lead to the vision of the Technological Singularity. Saudi Arabia wants to diversify from oil for a long term sustainable economy. However, investments now will have little to do with whether there is the possibility of far greater than human level artificial intelligence around 2047.
The fund will be about making large mergers and acquisitions of technology and other companies. Some will be artificial intelligence related but many are not.
SoftBank is nearing its most unusual move yet: It is buying Fortress Investment Group, an American private equity giant that oversees around $70 billion in assets. SoftBank will be paying $3.3 billion for Fortress, a premium to the company’s stock market value of $2.3 billion. The purchase of Fortress, a prominent private equity firm with a specialty in investing in distressed assets, was driven by Rajeev Misra, a former top derivatives expert at Deutsche Bank who has taken a leading role in setting investment strategy for the SoftBank Vision Fund. Mr. Misra will be helping steer an enormous new fund that is intended to invest in technology companies worldwide, often by taking huge stakes.
Softbank CEO Masayoshi Son has made a lot of high profile investment bets over the years. By 1984, Softbank owned 50 per cent of Japan’s retail market for computer software. Its relentless CEO was exploring other business lines. The firm moved into telephone-routing devices, magazine publishing, and broadband internet service. Son loved to buy and sell, throwing money into 600 technology companies, including GeoCities, Ziff-Davis Publishing and the Comdex computer show.
Ziff-Davis’s chief executive, Eric Hippeau, introduced Son to a struggling small company called Yahoo, which wanted $5 million to develop its search engine tech. Famously, Masayoshi Son offered $100 million. Yahoo founder Jerry Yang replied that they didn’t need that much. To which Son countered: “Everyone needs $100 million.” Thus, Softbank owned more than one-third of Yahoo when it went public in April 1996.
Masayoshi Son was similarly prescient about Alibaba, offering a big sum to its CEO Jack Ma when he hadn’t even asked for it. As a result, Softbank got a third of Alibaba – a stake worth $75 billion on the day of the Alibaba IPO. SoftBank’s $20 million investment in Alibaba back in 2000 probably ranks as one of the greatest ever.