It's been a wild year for Softbank. After taking serious losses from their bad, multi-billion dollar bet on WeWork, the Japanese firm continues to take a beating
Who is Softbank: Led by notorious Japanese Masayoshi Son, Softbank is one of the biggest investors in the world.
On top of their huge holdings in 'traditional' businesses like T-Mobile and Alibaba, Softbank manages a sexy $100 billion Vision Fund that takes positions in some of the hottest tech companies, including WeWork, Uber, Wag (the dog walking service), and Oyo (an Indian hotel disruptor).
What happened to Softbank? In 2016, the Vision Fund was on top of the investing world. Two of their biggest positions, Uber and WeWork, were rapidly growing and seemingly couldn't be stopped. That all changed in 2019...
A leadership scandal at WeWork and poor public offering by Uber forced the firm to report huge loses, only made worse by COVID-19.
And that takes us to today, the Japanese conglomerate is now looking to buy all their public stock and take the company private.
How do they plan to do this? The firm is nearing a big sale of their asset Arm Holdings, a UK chipset manufacturer, to Nvidia which would generate a new $40 billion return to the fund. The proceeds from this transaction could go towards buying out public market shareholders.
Zoom out: Going private would be a huge move. Softbank is the second most valued Japanese company in the world and taking it private would have significant ramifications to the Nikkei, the Japanese stock market.
But taking the company private would give Masayoshi Son more control over the company and greater flexibility to conduct a turnaround without being handcuffed by stock price fluctuations and the concerns of public market shareholders.
While experts think that taking Softbank private is a tough sell, the Arm Holdings/Nvidia deal would position the company well for such a move.