Is Softbank Trying To Become The Next Google?

by Sohini Bagchi    Oct 17, 2016

investment

Softbank Group (SBG), a Japanese tech investment giant, is set to launch a global technology investment fund that could grow as large as USD 100 billion. This will be one of the biggest tech investment funds in existence till date. While it may sound too ambitious a target for Softbank or any other tech major to attain this height, some in the industry believe whether the Japanese major is looking everywhere much like Internet giant Google, which started as a search company helping web users find relevant content in cyber space and has now morphed itself into an enterprise that is looking to impact every human life on this planet.

Read more: Why Google Wants To Be Everything To Everybody

Until now, SoftBank has made tens of billions in returns from investments in companies such as Alibaba Group Holding  and Yahoo. Earlier this year, it invested USD 3.5 billion in US ride-hailing firm Uber, which surprised many in the industry. Moving to bigger deals, the company purchased UK-based ARM Holdings back in July for USD 31 billion, helping it step up investment in new areas such as the internet of things (IoT)- the disruptive technology sub-industries that will define the future of both our personal and professional lives. 

Softbank was looking for such an opportunity to move to the next level in technoloogy investment for a while, believe experts. Hence by buying the advanced mobile processors firm, the Tokyo major is confident of becoming well-placed in the IoT, and subsequently artificial intelligence [AI] and robotics space.

The new ambitious fund, tentatively named ‘Softbank Vision Fund’ is backed by Saudi Arabia’s top sovereign wealth fund, the Public Investment Fund (PIF) will be the lead investor, potentially contributing up to $45bn over the next five years, while Softbank expects to invest at least $25 billion, according to a statement.

The project will be led for SoftBank by India-born Rajeev Misra, a veteran banker, who joined SoftBank in October 2014, around the same time when Nikesh Arora joined the Japanese investor as a potential successor to its founder Masayoshi Son. While Arora quit SoftBank in July this year after Son declared that he was still young to run the company, Misra continued as the global head, credit and emerging markets, Deutsche Bank, said a Bloomberg report.

“The Fund will make investments drawing upon SBG’s investment proficiency, operational expertise and breadth of experience in the technology sector, Misra said in a statement, which also added, the move is part of a series of business initiatives launched by Riyadh this year as Saudi Arabia, whose economy was hurt by low oil prices, is now spending on the huge financial reserves in an effort to move into non-oil industries.

“Over the next decade, the SoftBank Vision Fund will be the biggest investor in the technology sector,” SoftBank Chairman Masayoshi Son said, hinting that several other large, unnamed investors are also in active talks on their participation and could bring the total size of the new fund up to USD100 billion.

Read more: Alibaba And Softbank Join Hands To Offer Cloud Services

However, it is not clear whether the fund will make venture-capital type bets on younger companies, or bid for control of bigger groups, like a buyout firm, note analysts. The fund’s remit is also vague. Citi analysts say it will invest in artificial intelligence and the internet of things. But Son’s interests are wide-ranging, so “tech” could also include other fields such as green energy. For example, last year, SoftBank teamed up with Bharti Enterprise and Foxconn to launch $20 billion worth of solar energy projects in India.

Nonetheless, its new joint investment fund is supposedly a broad investment strategy and is ambitious enough to target every disruptive technology - and it seems that Softbank is looking out everywhere in tech investment and is gearing up to become the next Google of the world.