SoftBank rakes in US$10 billion from Alibaba share sale

PUBLISHED : Monday, 06 June, 2016, 6:59pm
UPDATED : Tuesday, 07 June, 2016, 6:31am

Japanese conglomerate SoftBank Group Corp, the largest investor in Alibaba Group, has raised total proceeds worth US$10 billion after increasing the amount of shares it has sold in the Chinese e-commerce giant.

That figure is up from the US$8.9 billion announced on Thursday by SoftBank, which made its first sale of Alibaba stock since its initial investment in the Hangzhou-based company in 2000.

“We believe that the proceeds from the sale of [SoftBank’s] Alibaba stake, as well as from all other ... divestments will be used to potentially boost [the company’s share] buybacks,” Jefferies equity analyst Atul Goyal said in a research note.

In a statement, SoftBank said the qualified institutional buyers of its newly formed Mandatory Exchangeable Trust “exercised in full their option to purchase up to an additional 20 per cent, or US$1.1 billion of the securities”, which are exchangeable into Alibaba shares in three years.

That followed the aggregate private placement of US$5.5 billion in trust securities sold by SoftBank to these unnamed buyers on Thursday.

The total purchased 66 million exchangeable securities outstanding, which will pay quarterly distributions of US$1.4375 per trust security, allows SoftBank “to retain upside exposure to Alibaba while monetising a portion of its holdings” in the world’s largest e-commerce services company, the Japanese firm said.

Members of the Alibaba Partnership, which include executive chairman Jack Ma Yun and the company’s other co-founders, acquired US$400 million of Alibaba shares from SoftBank at the same price.

Singapore sovereign wealth fund GIC Private agreed to buy US$500 million of Alibaba shares from SoftBank. Aranda Investments, a wholly owned subsidiary of state-owned investment firm Temasek Holdings (Private) in Singapore, bought US$500 million Alibaba shares.

SoftBank said it will retain a 28 per cent stake in Alibaba after all those transactions are completed. It had a 32.2 per cent shareholding as of March 31.

Alibaba owns the South China Morning Post.