Japanese telco Softbank has closed the first round of funding for its $100bn investment fund, having secured commitments from Saudi Arabia’s Public Investment Fund, Apple, Foxconn, and others. The Softbank Vision Fund is the largest such fund in history and is targeting investments in sectors such as IoT, virtual reality, robotics, financial technology, and more.
The Vision Fund was first announced in October 2016, with an initial commitment of $45bn from the Saudi fund, and forms part of Saudi Arabia’s goal of reducing its economic dependence on oil over the next 15 years. The Vision Fund’s investment period is set at five years, meaning it will be aiming to invest around $20bn per year, with minimum investments set at $100m, and it will target both privately held and public businesses for stakes of 20–40%, giving it a position on boards and the ability to discuss strategy with founders.
Other key investors include Apple, which is investing $1bn, as well as Qualcomm, Foxconn, and Foxconn subsidiary Sharp, though these companies’ funding amounts haven’t been disclosed. Softbank will be contributing $25bn of its own money to the fund.
Softbank has been active in investments and acquisitions in key innovative sectors, such as IoT – according to Ovum’s IoT Investments Tracker 2H16, the company’s $31bn acquisition of semiconductor firm ARM was one of the two largest acquisitions in the sector to date. In fact, the fund will have the right to acquire investments already bought by Softbank, including 24.99% of its ARM holding, as well as its other investments in companies such as Nvidia and SoFi, which may have sweetened the deal for the likes of Apple and Sharp.
Both the Softbank Vision Fund and the ARM acquisition will play into CEO Masayoshi Son’s vision of connecting trillions of devices for a variety of uses, such as autonomous vehicles and smart cities. Since its announcement in October, the Vision Fund has announced a number of deals, including Chinese ride-sharing app Didi Chuxing, Indian digital payment company Paytm, and virtual reality startup Improbable Worlds.
In addition, the Vision Fund is expected to be the source of the $50bn investment in the US to create thousands of new jobs that Masayoshi Son promised the incoming US administration. This promise is most likely related to Softbank’s intentions to acquire US telco T-Mobile for a merger with its own subsidiary Sprint.
"IoT acquisitions by TMT firms hit $93bn mark in 2016," TE0019-000035 (March 2017)
Francesco Radicati, Senior Analyst, Consumer Technology
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