SoftBank plans up to $20bn in loans to employees so they can invest in new tech fund

The second Vision Fund aims to raise $108bn

Masayoshi Son, chairman and chief executive officer of SoftBank Group Corp., reacts during a news conference in Tokyo, Japan, on Wednesday, Aug. 7, 2019. SoftBank reported first-quarter profit that beat the highest analyst estimate thanks to valuation gains from Vision Fund investments such as Slack Technologies Inc. Photographer: Kiyoshi Ota/Bloomberg
Beta V.1.0 - Powered by automated translation

SoftBank is planning to lend as much as $20 billion (Dh73.5bn) to its employees, including chief executive Masayoshi Son, to buy stakes in its second venture capital fund following the success of an earlier $100bn fund to invest in tech start-ups, the Wall Street Journal reported.

The second Vision Fund aims to raise $108bn, SoftBank said last month, and it plans to commit $38bn of its own capital to the second fund. In addition to its employees, Apple, Goldman Sachs, Microsoft, Foxconn and the sovereign wealth fund of Kazakhstan are expected to invest in the tech fund. Seven Japanese financial institutions have also signed preliminary agreements to participate.

SoftBank founder Mr Son may account for half of the employee investment pool, according to the Journal, citing people familiar with the matter it didn't identify.

Mr Son has a net worth of $16.9bn, making him Japan’s second-richest person, according to the Bloomberg Billionaires Index.

Executives at the telecom giant, the second biggest in Japan, believe that lending employees money to participate in the fund will make them more accountable as the investments of the fund can be canceled if a manager leaves or is found to have engaged in a "reckless deal", according to the Journal.

Citing an unnamed source, the newspaper reported the loans are likely to have an interest rate of about 5 per cent.

Earlier this month, SoftBank reported first-quarter profit that beat the highest analyst estimate with valuation gains from Vision Fund investments such as collaboration platform Slack, which went public in June, hotel chain Oyo Rooms and food-delivery app DoorDash. The gains were offset by a $1.8bn decline in the fair value of holdings including Uber, Bloomberg reported.

SoftBank also disclosed the Vision Fund held 81 investments worth about $66.3bn and the first fund had earned 62 per cent returns so far. About five or six companies from the fund will list by next March, Mr Son said earlier.

SoftBank was not immediately available for a comment.