SoftBank Group Corp is likely to cut its stake in Chinese e-commerce giant Alibaba. Meanwhile, this was done so that the Japanese technology conglomerate could invest in startups that were not registered through Vision Fund II and buy back their shares.
"SoftBank sold 20 million Alibaba shares in the last quarter and will need to sell more in 2022," Jefferies analyst Atul Goyal wrote in a note.
Goyal estimates the group will need $40 billion to $45 billion in cash this year, if it maintains its current pace of investment in startups and share buybacks as part of its 1 trillion yen program.
According to him, SoftBank is prioritizing Vision Fund 2, which has taken stakes in more than 200 companies including recent investments in AI software company 6sense, digital financing platform Funding Societies and cryptocurrency business Polygon.
Earlier this month, SoftBank said there was no link between Alibaba listing its US stock facility and any plans to sell its stake.
However, the group is under pressure to cut shares following the collapse of a deal to sell chip designer Arm to Nvidia.
"We will definitely sell off most of the assets," SoftBank CEO Masayoshi Son told analysts earlier this month.
The conglomerate, which was forced to sell Arm after being hit by a decline in valuations during the COVID-19 pandemic, is hoping to list the British company in New York.
Son says Arm's successful listing will give the group more dry powder for options including repurchases. "It's a big buyback time now," Son said in a recent English-language video aimed at investors.
