SoftBank Group is racing to close a funding commitment worth $22.5 billion to OpenAI by year-end through an array of cash-raising schemes, including a sale of some investments, according to Reuters. The company could tap its undrawn margin loans borrowed against its valuable ownership in chip firm Arm Holdings.
This would be one of SoftBank CEO Masayoshi Son’s biggest bets, as he steps up his efforts to cement the firm’s position in the AI race. Son sold SoftBank’s $5.8 billion stake in Nvidia to come up with the money for this investment. He also offloaded $4.8 billion of its T-Mobile U.S. stake, and slashed staff. SoftBank Chief Financial Officer Yoshimitsu Goto told investors earlier that the company’s recent asset sales are part of a broader effort to balance growth and financial stability.
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Sources also told Reuters that Son slowed down other deal making efforts at SoftBank, and any deal above $50 million now requires his explicit approval.
SoftBank is also working towards taking its payments app operator Payday public. The initial public offering, originally expected this month, was pushed back due to the 43-day-long U.S. government shutdown, which ended in November. Payday’s market debut is likely to raise more than $20 billion, and is expected to be in the first quarter of the next year.
SoftBank is also looking to cash out some of its holdings in Didi Global, the operator of China’s dominant ride-hailing platform, which is looking to list its shares in Hong Kong after a regulatory crackdown forced it to delist in the U.S. in 2021, sources told Reuters.
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Investment managers at SoftBank’s vision fund are also being directed to the OpenAI deal. SoftBank’s scramble for funds shows how even the world’s biggest dealmakers face strain as they attempt to finance data center projects. OpenAI and SoftBank are also collaborating on the ambitious Stargate project.
While OpenAI has not received the remaining funding, it expects the money to come in by the end of 2025. SoftBank has multiple sources of capital it can tap, including margin loans, cash on its balance sheet, stakes in listed companies, and corporate bonds or bridge loans, according to sources.
According to Reuters, Son has strong reasons to draw on a range of funding mechanisms to fulfill those obligations. SoftBank secured a deal to invest in OpenAI at a $300 billion valuation in April, and since then, the ChatGPT-maker’s valuation has risen dramatically, tripling its valuation to close to $900 billion. This would give SoftBank a significant paper gain once the transaction is completed.