Softbank downsizes with a ‘Spac’
Japanese conglomerate SoftBank Group is to create a purpose acquisition company (Spac) which it will use to buy private companies.
Japanese conglomerate SoftBank Group is attempting to take advantage of investor appetite for both special-purpose acquisition companies (Spacs) and technology shares, says Tim Culpan on Bloomberg.
The Spac will comprise money from public investors, SoftBank’s flagship Vision Fund and funds from selling additional debt. The resulting pool of capital can then be used to buy private companies. The new vehicle will mark the first time that private investors will be allowed to participate directly in SoftBank’s venture capital investments; they won’t be obliged to suffer “a massive conglomerate discount” by investing in the wider company.
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Investors should also beware, says Lex in the Financial Times. The simplified listing around Spacs typically leads to “lower levels of scrutiny”, with one recent study suggesting that Spacs’ returns have lagged the market over the last two years. This is a particular concern given SoftBank’s “history of opaque trades and governance”.
