SoftBank Group Corp. CEO, Japanese billionaire Masayoshi Son created a lot of excitement when he announced the Softbank Vision Fund, a new vehicle for investing in global technology. Things got even more exciting when the size of the fund became public.
The fund pegged at $100 billion is set to close in January and although SoftBank has not provided details on the specific investments the fund will make, sources indicate they will include all sorts of emerging technologies such as artificial intelligence and the Internet of Things.
In addition to the $25 billion contribution by SoftBank over the next 5 years, according to CEO Son, Abu Dhabi’s Mubadala Development Co. is considering a $10 to $15 billion commitment. Saudi Arabia’s Public Investment Fund said it would put in as much as $45 billion.
Apple Inc. (NASDAQ:AAPLB) said it planned to invest $1 billion into the fund and Qualcomm Inc. (NASDAQ:QCOMC) also said it would participate but so far has not disclosed the amount. Others expected to chip in include Foxconn Technology Co. Ltd. and Oracle Corp. (NASDAQ:ORCLD).
The Trump Connection
In December Donald Trump met with the SoftBank CEO and subsequently announced that Son told him SoftBank had agreed to invest $50 billion in the U.S. with an aim to create up to 50,000 jobs.
In a tweet Trump said Son told him he "would never do this" if Trump had not won the election. However, Dow Jones reported that the $50 billion to which Trump referred was part of the previously announced SoftBank Vision Fund and not a new or different investment.
An M&A Issue For SoftBank
SoftBank, which owns about 80% of Sprint Corp. (NYSE:SB) previously expressed interest in combining that company with T-Mobile US Inc. (NYSE:TMUSC). There was regulatory resistance but SoftBank’s latest plan to invest $50 billion in the U.S. has caused some to wonder if the merger might be back on the table.
One thing is certain. Son has not wavered in his interest in boosting Sprint through consolidation in the domestic wireless space. By not challenging president-elect Trump’s assertion that the SoftBank investment came only after his (Trump’s) election, it also seems apparent Son and SoftBank want a positive relationship with the new administration.
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As a potential competitor, Apple’s decision to invest in the SoftBank fund comes as something of a surprise. In addition, Apple does not have a habit of investing in venture capital funds. In confirming its investment an Apple spokeswoman said, “We believe their new fund will speed the development of technologies which may be strategically important to Apple.”
Other competitors including Alphabet Inc. (NASDAQ:GOOGC) and Amazon.com Inc. (NASDAQ:AMZNC) have launched their own connected devices and so far, have shown no interest in joining the SoftBank team. Apple’s involvement could be a move on that company’s part to protect its core smartphone business according to market analyst, Roger Kay. Kay indicated that Apple’s participation was also about alliances, something that company has increasingly sought to build in Asia.