UPDATE:
SoftBank is considering seeking a valuation of about $90 billion for its Japanese wireless business in a planned initial public offering, people familiar with the matter said. The shares rose the most in two months.
SoftBank is speaking to advisers about selling a third - or about $30 billion - of the business in the IPO, the people said, asking not to be identified. SoftBank rose 6.5 per cent in Tokyo, the biggest increase since June 9.
A representative for SoftBank declined to comment.
A $30bn-IPO would make SoftBank Mobile the largest listing ever. The SoftBank unit could be listed in Tokyo as early as the fourth quarter, the people said. SoftBank founder Masayoshi Son said he’s working toward a listing on the Tokyo Stock Exchange.
SoftBank Group’s monster Vision Fund plans to lead an investment of $3 billion to $5bn into Ele.me, the food delivery giant owned by Alibaba , people familiar with the matter said.
The $100bn fund led by Masayoshi Son is heading up discussions with potential investors including venture capital firms, said the people, who asked not to be identified. As part of the agreement, Alibaba intends to merge Ele.me with in-house arm Koubei, which focuses on connecting restaurants to the internet, the sources added. Negotiations are ongoing and the terms could still change, they said.
The financing presents a much-needed capital infusion for Ele.me, which is burning enormous amounts of cash in a competition with Meituan Dianping, the Chinese internet giant backed by Alibaba-foe Tencent. While it’s unclear how big a stake is available in Ele.me, which was valued at $9.5bn in Alibaba’s April acquisition, investors get a piece of a company that’s said to be a candidate for an initial public offering.
Ele.me and Meituan are incurring huge losses as they offer heavy discounts on food orders to lure users in a bitter fight for market share. While that lowers prices for customers, both companies have to maintain payments to the armies of drivers on motorcycles that do their deliveries.
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The investment will come from the SoftBank Vision Fund, created to channel investments into some of the world’s most influential companies in an effort to stake out a dominant position in future technologies. Mr Son’s betting that robotics and artificial intelligence will trigger an upheaval of older industries. On a more personal level, the Japanese investor was one of Alibaba’s earliest backers and remains a close friend of Alibaba-founder Jack Ma’s. The two sit on each other’s boards.
The market for on-demand services in China is surging as people increasingly turn to their smartphones to order meals, schedule beauty treatments and hire domestic helpers. It’s also strategically important for Alibaba and Tencent as a means of promoting their respective payment services.
Reuters first reported the targeted fundraising amount and merger plan. Alibaba declined to comment on behalf of Ele.me. A SoftBank spokesman declined to comment.
Alibaba bought out the rest of Ele.me this year but the start-up is run somewhat independently. Meituan itself is marching toward an initial public offering.
Meituan, the world’s third-most valuable tech start-up according to CB Insights, revealed huge losses but also a scorching pace of growth when it filed for a much-anticipated Hong Kong initial public offering. The start-up, of which Tencent owns more than a fifth, posted a net loss of 19 billion yuan (Dh10.28bn) last year, hurt by ballooning spending and after accounting for its preferred stock. However, the internet company more than doubled revenue to 33.9bn yuan.
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