SoftBank exploring offering credit funds to tech startups- sources

FILE PHOTO: SoftBank Corp's logo is pictured at a news conference in Tokyo
SoftBank Corp's logo is pictured at a news conference in Tokyo, Japan, February 4, 2021. REUTERS/Kim Kyung-Hoon/File Photo

May 22 (Reuters) - SoftBank Investment Advisers, which manages two Vision Funds, is exploring launching a private credit strategy that provides debt or debt-like structured financing for late-stage tech startups, people familiar with the matter told Reuters.

The fund aims to offer liquidity options to tech startups, including some of SoftBank's own portfolios, amid a slow venture funding environment and a weak market for IPO exits. It targets returns in the mid-teens, one of the sources added.

The plan, which was still in its early stage and could change, was first reported by Bloomberg News earlier on Monday. SoftBank declined a Reuters request to comment.

In recent weeks, several major investment and private equity firms have stepped in to fill the chasm created in tech funding, especially debt financing, by the collapse of Silicon Valley Bank [RIC:RIC:FCZA.UL] in March.

Japan's SoftBank Group Corp (9984.T), a prolific investor in high-growth technology firms, will be able to tap the rapidly growing private credit market and provide capital for pre-IPO companies that need to survive for longer in a much harder environment to raise new capital.

Earlier this month, the company posted a sharply narrower annual loss after a capital raise using its stake in Alibaba Group Holding Ltd (9988.HK) helped cushion investment loss at its Vision Fund investing arm, which has been hammered by the underperformance of major investments such as office-sharing firm WeWork Inc (WE.N) and ride-hailing giant Didi Global Inc.

Vision Funds' portfolio includes neobank Chime and Revolut. SoftBank is nearing the end of deploying the $56 billion capital in Vision Fund 2.

Chipmaker Arm Ltd, owned by SoftBank Group, last month filed confidentially for a U.S. stock market listing, setting the stage for one of the biggest tech IPOs in the U.S. this year.

Reporting by Krystal Hu in New York and Manya Saini in Bengaluru; Editing by Shilpi Majumdar

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Krystal reports on venture capital and startups for Reuters. She covers Silicon Valley and beyond through the lens of money and characters, with a focus on growth-stage startups, tech investments and AI. She has previously covered M&A for Reuters, breaking stories on Trump's SPAC and Elon Musk's Twitter financing. Previously, she reported on Amazon for Yahoo Finance, and her investigation of the company's retail practice was cited by lawmakers in Congress. Krystal started a career in journalism by writing about tech and politics in China. She has a master's degree from New York University, and enjoys a scoop of Matcha ice cream as much as getting a scoop at work.

Thomson Reuters

Manya Saini reports on prominent publicly listed U.S. financial firms including Wall Street’s biggest banks, card companies, asset managers and fintechs. Also covers late-stage venture capital funding, initial public offerings on U.S. exchanges alongside news and regulatory developments in the cryptocurrency industry. Her work usually appears in the finance, markets, business and future of money sections of the website. Contact: 9958867986