SoftBank’s USD 108 bn fund draws in MS, Apple

The Japanese conglomerate itself plans to invest $38 billion in the fund, it said in a statement. Others set to join include Apple Inc and Taiwan’s Hon Hai Precision Industry Co Ltd (Foxconn)- both investors in the first fund.

Notable by their absence on the list of state and corporate backers were the sovereign wealth funds of the two countries which formed the cornerstone of its first fund: Saudi Arabia and UAE, as well as investment bank Goldman Sachs. SoftBank said it was still talking to potential investors and that it expected the fund’s anticipated capital to grow.

Saudi Arabia’s Crown Prince Mohammed bin Salman told Bloomberg in October his country was ready to commit a further $45 billion through its Public Investment Fund (PIF), adding: “Without the PIF, there will be no SoftBank Vision Fund.” Those close links later compelled Softbank founder and Chief Executive Masayoshi Son to defend the relationship after Saudi security personnel were accused of murdering Jamal Khashoggi, a journalist critical of the Saudi state.

Discussions between Softbank and PIF were ongoing, but the Saudis would wait for a formal proposal before deciding whether to invest in the new fund, a source familiar with the matter said. A spokeswoman for Abu Dhabi’s Mubadala told Reuters it was still in the process of assessing a potential investment. The Wall Street Journal on Wednesday reported Goldman Sachs would invest in the fund.

The second fund’s investor base reflects diversification beyond the Middle East that provided most of the first $100 billion fund’s outside capital as SoftBank touts industry-beating returns, with joiners including cash rich Japanese financial institutions and a Kazakh sovereign wealth fund.

“Those investing two years ago were investing in the vision, there was no proof the concept was going to succeed,” said Sanford C. Bernstein analyst Chris Lane.

“Given the track record achieved over the last two years Vision Fund 2 has been substantially de-risked,” Lane said. SoftBank in May said the first fund had generated a 45% internal rate of return for investors in its common shares, or 29% when debt-like preferred shares are included - though the gains still exist mostly on paper.

It said other participants in the second fund will include the National Investment Corporation of National Bank of Kazakhstan, Standard Chartered Bank PLC, undisclosed parties from Taiwan and the fund’s own managers.