SoftBank seeks up to $100B from Gulf investors, FT says

SoftBank Group founder Masayoshi Son is trying to raise as much as $100 billion from Gulf investors to expand his bets on artificial intelligence, the Financial Times reported on Friday, citing several people familiar with the matter. Over the past few weeks, Son has held talks with senior figures in the region, including in the United Arab Emirates.channelnewsasia+1

According to the FT, the money would go into a fund that buys companies and then uses AI and other advanced technology to improve how they operate. Roze, SoftBank's robotics and physical AI business, is expected to play a key role. Son hopes to eventually take Roze public at a high valuation. The people cautioned that the talks may not succeed. SoftBank declined to comment to the FT, and Reuters said it could not immediately verify the report.ft+1

Building on the OpenAI bet

The new fundraising effort would add to SoftBank's large exposure to AI, which includes a $65 billion investment in ChatGPT maker OpenAI. Last week, SoftBank said it had completed a $30 billion investment in OpenAI tied to the startup's latest funding round.channelnewsasia+1

To pay for those commitments, SoftBank has borrowed heavily. Last month it sold more than $11 billion of junk bonds, the largest high-yield offering on record, with yields as high as 9.75%. The FT said the company's loan-to-value ratio stood at 13% at the end of June, well below its 25% ceiling for normal operations, and its net asset value was ¥72.3 trillion.ft+1

SoftBank shares fell sharply in Tokyo trading on Friday. The FT reported that the stock is still up 25% this year but has dropped more than 30% from its June peak, when SoftBank briefly became Japan's most valuable company. The newspaper also said OpenAI's decision to delay its long-awaited initial public offering has led some investors to question how much more money Son can put into AI.investing+1

Turning to the Gulf again

This is not the first time Son has looked to the Gulf for large sums. The UAE sovereign fund Mubadala and Saudi Arabia's Public Investment Fund both invested in SoftBank's first $100 billion Vision Fund in 2017. Abu Dhabi has since become one of the world's biggest spenders on AI through the investment fund MGX and the AI holding company G42. Neither responded to the FT's requests for comment.ft

Analysts warn that SoftBank's heavy reliance on OpenAI is a risk if the startup's valuation falls. "A contagion effect . . . could get quite bad, quite quickly," an Asia-based analyst told the FT.ft