On Monday, the Japanese conglomerate unveiled plans to raise more than half a billion dollars in New York through an initial public offering by a special purpose procurement company (SPAC).
The newly created company, SVF Investment Corp., intends to list the Nasdaq under the symbol “SVFAU”. Initially, it will seek to raise $ 525 million, but this could reach nearly $ 605 million if there is a strong interest in the shares.
SVF is sponsored by a subsidiary of SoftBank investment advisers, which oversees the Vision Fund – SoftBank’s vehicle for many of the company’s technology investments.
SPACs are shell companies with little or no operational assets that go public only to raise money and buy existing business. These so-called “blank check” firms used to be mocked on Wall Street, but took off largely this year.
Back to the offense
The announcement is yet another signal that SoftBank (SFTBF), itEdited by Japanese billionaire Masayoshi Son, it is ready to return to the crime after working this year to raise money during the coronavirus pandemic.
After a series of embarrassing losses, Son forced the company to collapse. The company said last month that it had sold nearly $ 100 billion in assets throughout the year, including $ 14 billion in shares of its Japanese mobile operator and a $ 40 billion sale to the British manufacturer. of ARM chips. The latter is still awaiting regulatory approval.
But this strategy is changing.
Earlier this year, SoftBank bought $ 4 billion worth of options underlying shares it previously bought from technology companies such as Amazon, Microsoft and Netflix. While these bets didn’t seem to pay off, they signaled that Son was ready to start taking risks again.
This month, SoftBank acquired another new project, investing approximately $ 780 million in Sinch, a Swedish provider of telecommunications and cloud services.
SoftBank has confirmed that it wants to use its SPAC to make a purchase. In a case filed Monday with the U.S. Securities and Exchange Commission, the new company said it would look for a potential target somewhere “broadly in the technology landscape,” which could include anything from artificial intelligence and fintech to semiconductors and robotics.
He mentioned that he will not rule out the possibility of buying a company in which SoftBank has already invested, saying that “it is not forbidden” to conclude such an agreement. In this case, the company said it would consult an independent party to ensure that “it is financially fair to our company.”
SPAC mania
SoftBank is the latest big name to get on the SPAC body. By 2020, $ 75.4 billion has been raised through US-listed SPAC IPOs, according to data provider Refinitiv.
This is a huge leap from 2019, when such companies raised only $ 13.1 billion.
A number of major companies have recently chosen to take the same route, including Playboy, DraftKings and electric vehicle startups Nikola and Arrival. Billionaire business leaders such as Richard Branson and Peter Thiel have also taken action.
But some fear that these transactions will spiral out of control and could be an ominous sign of unpleasant market euphoria.
Technological stocks also appeared this year. Technical-hard Nasdaq Composite (COMP)for example, it has increased by 42% so far in 2020.
SoftBank himself alluded to the impulse in his prospectus, saying he was encouraged to join after seeing the space warm up.
“Over the past 18 months, we have seen a significant increase in public market investor interest in high-quality companies operating in high-tech sectors,” the company said. “To that end, we believe that launching a check company now gives us the opportunity to maximize value for our investors.”
– Matt Egan and Charles Riley contributed to this report.
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