By Erik Schatzker and Sarah McBride
Rajeev Misra, the head of the Vision Fund, teased the effort in an interview with Bloomberg at the Milken Institute’s virtual conference, without providing details. Misra separately addressed reports from last month that SoftBank was the “Nasdaq whale” and downplayed its influence in stirring froth in the market for tech stocks.
The target size of the Vision Fund’s blank-check company has yet to be determined, according to a person familiar with the plans. SoftBank is expected to seek outside funds and may contribute some of its own capital, said the person, who asked not to be identified because the details are private.
SoftBank’s experiments beyond its traditional expertise have spooked some investors, including earlier this year when the company traded billions in stock options. Some accused the company of pumping up tech valuations with its purchases, but Misra dismissed that idea in the interview Monday.
“Are we buying a few billion of other stocks to diversify away from the Alibaba we sold in the past six months?” Misra asked. “We’re still sitting on a lot of cash. It’s a liquidity-management strategy, it’s a diversification strategy.”
“Nobody buying $10 billion of Nasdaq over a few weeks is going to move the Nasdaq. We’re not even a dolphin; forget being a whale.”
The Vision Fund is known mainly for its investments in startups. With about $100 billion from Saudi Arabia and other investors, SoftBank rained cash on nascent companies in recent years, and the results were sometimes problematic. Uber Technologies Inc. and WeWork spent money freely without an apparent consideration for profits.
Bad investments combined with the economic fallout from the coronavirus pandemic led to a plunge in SoftBank’s stock in March. But SoftBank sold assets and bought back its own stock, pushing shares to a two-decade high this month.
The company’s shares have gained about 50% this year and were little changed in Tokyo trading Tuesday. Among the assets sold were stakes in Alibaba Group Holding Ltd., T-Mobile USA Inc. and the SoftBank domestic wireless business in Japan.
The blank-check venture will combine the Vision Fund’s expertise in tech startups with SoftBank’s new emphasis on public stock trading. Blank check firms, also known as special purpose acquisition companies or SPACs, ask investors to put money in a stock before knowing which company they’re backing. The SPAC manager then chooses a company, typically one that’s privately traded, and pursues a merger that lets the startup go public and inherit the capital raised.
So far this year, more than 100 SPACs have raised over $40 billion on U.S. stock exchanges. One of the Vision Fund’s own companies, Opendoor, said last month it was going public through a merger with a blank-check company led by Chamath Palihapitiya, a prolific SPAC manager.
“The SPAC as a vehicle, I think, is ultimately going to be transformative for the capital markets,” Scott Minerd, chairman of investments and global chief investment officer at Guggenheim Partners, said at the Milken conference.