SoftBank looks to raise $630m as its sets up two more acquisition companies

The new companies will target mobile communications and artificial intelligence firms

A pedestrian walks past the logo for telecom and investment giant SoftBank Group along a street in Tokyo on February 8, 2021, ahead of the company's earnings reports expected after the markets close later in the day.  / AFP / Charly TRIBALLEAU
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SoftBank Group plans to raise as much as $630 million through two more blank-cheque companies, capitalising on record investor demand for the vehicles.

The Tokyo-based technology conglomerate said it would create the special purpose acquisition companies less than two months after it filed to create a $525m blank-cheque company. SPACs look to merge with private companies, letting them become publicly traded firms while avoiding some of the uncertainty of an initial public offering.

The vehicles have become a popular way for venture-backed start-ups to list on the public markets. More than $35 billion has been raised by the 117 SPACs that have gone public on US exchanges this year, according to data compiled by Bloomberg.

SoftBank shares were up as much as 6.1 per cent in Tokyo on Monday ahead of the company’s latest earnings report, on top of a five-day streak of gains.

The new SoftBank vehicles, SVF Investment Corporation 2 and 3, will target the same diverse areas of technology as the first, including mobile communications and artificial intelligence, according to filings on Friday with the Securities and Exchange Commission. Because the SPACs are different sizes, they can work with companies of different maturity.

SVF 2 has entered into a forward purchase agreement in which it has committed $100m to $150m of capital for when it combines with another company, its prospectus shows. SVF 3 has entered into a forward purchase agreement in which it has committed $150m to $200m of capital for when it combines with another company, its prospectus shows.

For both new vehicles, each unit of the SPAC will consist of one share and one-fifth of a warrant. Citigroup, UBS, Deutsche Bank, Cantor Fitzgerald and Mizuho Securities are advising on the listings.

SVF 2’s management committee is led by Munish Varma, a managing partner at SoftBank’s Vision Fund, while SVF 3’s management committee is led by Ioannis Pipilis. SoftBank’s first SPAC is led by Vision Fund Chief executive Rajeev Misra. Vision Fund chief financial officer Navneet Govil serves as the head of finance of all three SPACs. All are overseen by SoftBank Investment Advisers, which also runs the company’s Vision Fund.

Having three SPACs launches SoftBank into a growing collection of companies with multiple blank-check vehicles, including the Gores Group and investor Chamath Palihapitiya’s Social Capital Hedosophia.