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SoftBank Group Corp on Wednesday said it would book a gain of $34.1 billion by cutting its stake in Alibaba Group Holding as the Japanese investment giant looks to shore up its cash reserve as global markets deteriorate.The investment company will reduce its stake in Alibaba to 14.6% from 23.7% by settling prepaid forward contracts.
SoftBank’s Vision Fund investment arm recorded a loss of around $21.68 billion in the second quarter and $50 billion in the first half of the year as its tech bets soured, with Chief Executive Masayoshi Son on Monday pledging to reduce investment activity further and cut costs.
By settling the Alibaba share contracts, SoftBank “will be able to eliminate concerns about future cash outflows, and furthermore, reduce costs associated with these prepaid forward contracts,” it said in a filing.
“These will further strengthen our defence against the severe market environment.”
The filing showed that the estimated total gain of 4.6 trillion yen ($34.1 billion) includes 2.4 trillion yen from the revaluation of shares in the Chinese e-commerce giant and a derivative gain of 0.7 trillion yen.
Son invested $20 million in the Chinese e-commerce giant in 2000. Alibaba has since grown to become one of the world’s biggest e-commerce companies. However, Alibaba has lost over two-thirds of its value from highs in late 2020, hit by Beijing’s crackdown on the tech sector, which included a hefty fine on Alibaba and scrutiny of founder Jack Ma’s business empire.
SoftBank on Monday said it had sold its remaining stake in US ride-hailing giant Uber Inc (NYSE: UBER).
Picture Credit: TechCrunch
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