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SoftBank pours billions into Big Tech, amasses USD 1.2 billion in Amazon

Investment powerhouse changes tack after being burned by unicorns.

mage source: Tuchong FILE - In this Nov. 4, 2014 file photo, SoftBank founder and Chief Executive Officer Masayoshi Son speaks during a news conference in Tokyo. Japanese Internet company SoftBank Group Corp., which is struggling to turn around Sprint in the U.S., is reporting a 27 percent drop in profit for the fiscal year ended March 31, compared to the previous year. (AP Photo/Eugene Hoshiko, File) mage source: Tuchong.

SoftBank Group is on another investment spree — but this time it is buying into America’s Big Tech establishment rather than chasing highly valued startups in a bid to appease investors with immediate returns.

New filings Monday by the Japanese conglomerate show that it had built a USD 1 billion stake in Amazon as of June 30. Other new holdings included USD 500 million worth of shares in Google parent Alphabet, and USD 200 million each in Tesla and Netflix. Because share prices in these companies have risen since then, the Amazon stake alone is now worth USD 1.2 billion.

The filings, which SoftBank submitted this month to report activities in the April-June period, are required on a quarterly basis by the US Securities and Exchange Commission. This marks the first time SoftBank has made such a filing.

During an earnings call last week, SoftBank Chairman and CEO Masayoshi Son announced the launch of a subsidiary to invest USD 555 million in publicly listed stock using excess cash from recent big asset sales, including shares of Alibaba Group Holding.

The move to buy into large, public tech companies marks a shift in priorities for the Japanese investment powerhouse, as it grapples with investor pressure to improve its balance sheet.

SoftBank is known most around the world for its venture capital arm the Vision Fund, which backs private startups according to Son’s 300-year plan.

But its aggressive strategy, along with the formation of a second Vision Fund, has been called into question especially after its perceived reckless bet in WeWork. The coronavirus pandemic has added to the company’s financial woes.

Speaking of its new investment management subsidiary last week, Son said, “Amazon, Apple, Facebook, so these are the names generally recognized widely by many people. These are highly liquid names that we can sell quite easily in the market.”

“In addition to that, in order to minimize the risk, we use derivative transactions as well,” he said. “And against the volatility in the market, we hope to hedge the risk.”

Already, the new holdings in large US public companies seem to be paying off.

SoftBank’s position in Amazon, as disclosed in the Monday filing, would have reaped a USD 200 million gain in just six weeks, while its stake in Tesla would have gained USD 80 million, or 65%.

This article first appeared on Nikkei Asian Review. It’s republished here as part of 36Kr’s ongoing partnership with Nikkei. 36Kr is KrASIA’s parent company.