A little over twenty years ago, Masayoshi Son, CEO of SoftBank bet 20 million on a young e-commerce company after meeting its creator, Jack Ma. From this legendary bet in the history of the Tech there will soon not be much left. The Japanese conglomerate sold $7.3 billion worth of Alibaba shares.
Alibaba is coming out of a difficult period
Masayoshi Son owes his reputation as a scout for promising start-ups to Alibaba. However, after more than 20 years of relationship, SoftBank is parting ways with one of its greatest success stories. THE FinancialTimes revealed a major forward sales operation conducted by the Japanese group, with these Alibaba titles.
After having already sold $29 billion worth of shares in the e-commerce giant in 2022, SoftBank is selling another $7.3 billion worth of securities. Its stake in the Chinese company, around 14.6% according to a September public statement, will drop to 3.8%.
Jack Ma, the charismatic founder of Alibaba, had drawn the wrath of Beijing in 2020, initiating a resumption of power over its Tech giants. The value of the company, also battered by the “zero covid” policy, has been severely affected.
The sale comes when the price of the title is at its lowest for 6 years. Forward selling allows SoftBank to limit the risk of losses linked to price fluctuations. It is a question of selling a share at a price fixed later. SoftBank has the option to buy back its shares, but does not appear to be moving forward.
Alibaba’s stock price fell more than 4% after the revelations. The end of this historic relationship comes as the e-commerce company has begun a major restructuring to separate into six separate entities.
However, it is not necessarily because of any difficulties of Alibaba that this operation occurs, but of those of SoftBank. The conglomerate has experienced very heavy losses in the past two years after bets with disappointing results. In 2021 the group lost 27 billion dollars, 23.4 billion dollars just for the second quarter of 2022.
The movement initiated by SoftBank would be defensive, to reinforce “ our financial stability by increasing our available liquidity “according to the statements of a spokesperson at the FinancialTimes. A way to present figures a little more flattering when publishing the next results of the company.
In a similar move, SoftBank announced on April 12 that it would separate from its Seoul-based venture capital arm SoftBank Ventures Asia. A symbolic decision, it was one of the bridgeheads for finding promising new start-ups in which to invest. It is the younger brother of Masayoshi Son, Taizo Son, who should acquire it during the year.
The group will now devote all its attention to the IPO of its nugget Arm, which should not delay any longer.
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