is poised to sharply sell its stake in the Chinese tech giant
through a flurry of deals that have provided the investment group with much-needed cash amid a market slump, according to a report.
The Japanese technology investor, led by Masayoshi Son, raised $22 billion in cash by selling prepaid forward contracts this year related to more than a third of its stake in
(ticker: BABA), reported the Financial Times.
Prepaid forwards are a type of derivative that allows SoftBank ( 9984.Japan ) — which is increasingly turning to this method of raising money — to retain the ability to hold onto its shares, the report said, citing documents.
SoftBank has already sold more than half of its Alibaba stake through forwards, according to the report, which would reduce its stake in the company below the threshold to retain a board seat.
Shares in SoftBank rose 2.6 percent in Tokyo trading, with U.S.-listed Alibaba shares up 2.2 percent in premarket trading. Alibaba reports quarterly earnings later Thursday.
SoftBank, the growing Japanese investment group under pressure from a tech stock crash this year that sent public and private valuations crashing, owns almost 24 percent of Alibaba, according to FactSet data. SoftBank was an early investor in the company, with a $20 million funding round in 2000 that started Masayoshi Son’s rise to become one of the most influential investors in the tech space.
An exit from Alibaba at current prices would still be painful for SoftBank, with shares in the Chinese group down more than 50% in the past year and shares trading around their lowest levels since 2017. Alibaba’s market value was hit along with much of the rest of China’s tech sector amid regulatory crackdowns both in Beijing and Washington slowing growth in the e-commerce sector.
This is not the first indication that SoftBank has tried to reduce its ownership of one of its crown jewels.
More than 1 billion shares of Alibaba that were not yet listed in the U.S. market — the company is also listed in Hong Kong — were filed with the Securities and Exchange Commission in February. At the time, Citi analysts speculated that the move set the stage for an impending exit from a major investor whose shares are not yet listed in the US, such as SoftBank, which invested in the group before it went public.
Write to Jack Denton at [email protected]