Troubled SoftBank Group slices telco stake in SoftBank Corp

SoftBank Corp unveiled a new WeWork-designed headquarters in Tokyo, a symbol of the technology economy long before Coronavirus.

SoftBank Corp will be the biggest tenant of Tokyo Portcity Takeshiba, with Chief Executive Ken Miyauchi admitting at its opening that between 60% and 70% of its employees were working remotely.

Walk on by: Is Softbank headed for trouble – or is there something we're missing?  (Source: knowmadic media on Flickr CC 2.0)
Walk on by: Is Softbank headed for trouble – or is there something we're missing?
(Source: knowmadic media on Flickr CC 2.0)

Meanwhile the troubled broader SoftBank Group, headed by Masayoshi Son, said it will decrease its stake in the telecommunications company SoftBank Corp, possibly down to 40%.

The group could sell up to 22% of shares in the telco, which the Nikkei announced in early September 2020 will join the blue-chip Nikkei 225 index from October.

SoftBank Group has had a rough time of it in recent weeks. Its market capitalization fell by $13 billion between Monday and Wednesday, amid a broad tech stock sell-off.

Press reports have suggested SoftBank was the "Nasdaq whale," contributing to a market frenzy in US technology stocks by buying equity derivatives on a gargantuan scale.

Global markets hit nine consecutive all-time highs, while tech valuations stretched to unheard of levels.

A subsequent sell-off saw Tesla's shares plunge by 21% on Tuesday, wiping $82 billion from its market capitalization.

The group's chief compliance officer, Chad Fentress, has left the Tokyo-based conglomerate, and his seat on the WeWork board. Fentress had worked for SoftBank since 2018.

Other senior SoftBank Group executives departing in the last several weeks include its former global government affairs officer, Ziad Ojakli, who also has been with SoftBank since 2018.

The group, as well as buying US technology shares, had aggressively bought derivatives, including $4 billion in call options giving them access to buying large numbers of shares in the future.

With the company increasingly populated by former investment bankers with a thick skin for risk, like Deutsche Bank alumnus and Softbank Vision Fund managing partner Akshay Naheta, its behavior has struck many traders as like that of a hedge fund.

After S&P 500 and Nasdaq 100 futures have fallen substantially, "that primal scream you hear in the distance is coming from SoftBank's HQ in Japan," tweeted macro analyst Jim Bianco.

With its market capitalization in tatters, it is now building up cash by selling off such family silver as shares in its Japanese wireless carrier SoftBank Corp, a reliable source of dividend income.

And as 30% of SoftBank Group's stock is currently controlled by Masayoshi Son's management, a management buyout to delist the company and take it private may lie ahead.

WeCrashed. Now who's next?
A recent six-part podcast by David Brown explored WeWork's rise and fall, calling its $47 billion valuation and failed IPO a tale of "big money and bigger screw-ups."

SoftBank Group lent WeWork $1.1 billion in August, structured as senior secured debt, to help it cope with large cash outflow in the second quarter amid the coronavirus pandemic.

In March, April, and June, WeWork had a net loss of $671 million, including $116 million of such restructuring costs as severance payments. This loss was up 40% from the first three months of 2020, with its sales down by a fifth to $882 million.

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Masayoshi Son is a man of big gestures, with a thick skin to risk.

He lost $70 billion when the dotcom bubble burst, but persisted and invested $30 million in Jack Ma's little-known Hangzhou startup called Alibaba.

When Japan's 2010 Tōhoku tsunami left 228,863 people homeless, he vowed he would donate his salary until retirement to supporting its victims.

After the last week's fortunes, many will be asking whether SoftBank Group will prove tech's next great disaster tale.

But others might well wonder whether Masayoshi Son may have one trick left.

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Pádraig Belton, contributing editor special to, Light Reading

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