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.

“Nothing screams ‘bubble’ in the technology sector louder than a SoftBank Vision Fund Spac,” says Liam Proud for Breakingviews. But SoftBank’s decision to explore this route is also a mark of the company’s “waning influence”. Even if things go well, the new company is expected to raise a maximum of $500m, a fraction of the nearly $100bn received from investors in the original Vision Fund, most of which came from sovereign-wealth funds. Chasing public money to launch a Spac represents a “humble downsize”, for a company that has previously used “Gulf billions” to “reshape whole industries”.

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”. 

Recommended

Eight of the best grand and unusual homes for sale
Houses for sale

Eight of the best grand and unusual homes for sale

From a house surrounded by Italianate gardens in Devon to a 14th-century Scottish castle with views over the Firth of Forth and the former London home…
17 Sep 2021
2016 Áster: an impeccably balanced Ribera
Wine

2016 Áster: an impeccably balanced Ribera

This is one of the most expressive old vine Riberas I have tasted, and at a remarkable price, too.
17 Sep 2021
Three top walking destinations in the UK
Travel and holidays

Three top walking destinations in the UK

As autumn arrives, it’s time to get your boots on and head for the country, says Chris Carter
17 Sep 2021
Why are energy prices going up so much?
Energy

Why are energy prices going up so much?

UK energy prices are going through the roof, with electricity the most expensive in Europe and gas at its highest for 13 years. Saloni Sardana explain…
16 Sep 2021

Most Popular

Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
Should investors be worried about stagflation?
US Economy

Should investors be worried about stagflation?

The latest US employment data has raised the ugly spectre of “stagflation” – weak growth and high inflation. John Stepek looks at what’s going on and …
6 Sep 2021
How you can profit from the power of the grey pound
Share tips

How you can profit from the power of the grey pound

Higher life expectancy and surging asset prices have proved a boon for the baby-boomer generation, which has accumulated vast wealth. Younger generati…
10 Sep 2021