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The logo of Alibaba Group is seen lit up at its office building in Beijing, China. Photo: Reuters

SoftBank to book US$34 billion gain from selling Alibaba shares as Masayoshi Son speeds up sale of assets

  • SoftBank’s stake in the Chinese e-commerce giant will fall to 14.6 per cent from 23.7 per cent after the settlement of prepaid forward contracts
  • CEO Masayoshi Son is accelerating the transformation of the Japanese investment giant into a pure investment house

SoftBank Group expects to post a gain of more than US$34 billion from selling down its stake in Alibaba Group Holding, cashing in a chunk of its most storied investment to shore up finances as global markets deteriorate.

The Japanese investment giant’s board approved on Wednesday the early physical settlement of prepaid forward contracts corresponding to about 242 million American depositary receipts. After the settlement, which will run from August to September, its stake in China’s e-commerce leader will fall to 14.6 per cent from 23.7 per cent as of the end of June.

CEO Masayoshi Son has this year accelerated the sale of assets, speeding the transformation of his conglomerate into a pure investment house. Investors have long pressed SoftBank to cash in its shares in Alibaba, monetising one of the most lucrative bets in venture capital history – and one that made Son’s reputation as a start-up investor.

SoftBank Group CEO Masayoshi Son is selling assets as he turns his focus to the eventual initial public offering of Arm Ltd. Photo: Reuters

SoftBank had previously raised a huge slug of capital by selling forward contracts on Alibaba, taking in US$10.5 billion during the June quarter and another US$6.8 billion through such contracts on and after July 1.

Physically settling the contracts means SoftBank will relinquish its right to buy back the stock at some point. In the past, when SoftBank procured funds through its Alibaba stake, the company kept open the option to buy back the shares it released through the forward contracts.

A rare moment when SoftBank committed to lowering its Alibaba holdings was in 2016, when it needed to finance its purchase of chip architect Arm Ltd.

Son is now paring other holdings as he turns his focus to the eventual initial public offering of the British chip design giant. SoftBank has begun talks to sell asset manager Fortress Investment Group, and is also selling part or all of its 9 per cent stake in SoFi Technologies.