SoftBank may sell Alibaba stock to fund buyback

Tokyo: The slump in SoftBank Group Corp’s shares could prompt Masayoshi Son to play an ace card – cashing in part of his stake in Alibaba Group Holding Ltd.

Son is likely to sell Alibaba stock to help pay for another buyback in an attempt to bolster SoftBank shares, according to Jefferies Group analyst Atul Goyal. It’s a surprise the Japanese technology giant’s shares are “languishing” despite its large stake in Alibaba, Goyal wrote in a note. The shares have become “decoupled”, and SoftBank is seeing little upside from its holding, he said.

SoftBank’s stock is up 16% this year, while Alibaba’s has surged 45%. SoftBank’s market cap is about US$82bil, though its Alibaba shares alone are worth US$128bil.

SoftBank’s February announcement of a record 600 billion yen (US$5.5bil) buyback sent its shares to a peak in April, but the stock has since lost most of the gains. Investors have been spooked by the one-two punch of Uber Technologies Inc’s plunge after an initial public offering in June and WeWork’s meltdown that forced a bailout by SoftBank.

The poor performance of Son’s two marquee investments called into question the billionaire founder’s deal-making approach just as he’s trying to raise a successor to his US$100bil Vision Fund. — Bloomberg