In addition to negotiating with various technology companies the sale of shares in the IPO of ARM, the group SoftBank is negotiating the purchase of 25% of shares of the company that does not directly control the Vision Fund 1 (VF1). It is his own investment fund, created in 2017 and endowed with 100,000 million dollars, according to Bloomberg. After taking ARM private in 2016 for $32 billion, SoftBank sold that 25% of the company to VF1 in 2017 for $8 billion.
These negotiations, in which Mashayoshi Son is not participating due to a possible conflict of interest, come at a time when SoftBank, which currently owns 75% of ARM’s shares, is preparing to take the company public in the Nasdaq next month, with a valuation that they expect to be between 60,000 and 70,000 million dollars.
If these negotiations lead to an agreement, the Japanese investor would deliver a significant amount of money to its investors in the Vision Fund 1 fund. Among them are the Public Investment Fund of Saudi Arabia, and the Mubadala fund of Abu Dhabi. Both, like the rest of the fund’s investors, have suffered losses after some of the fund’s investment bets, such as WeWork and ride-sharing firm Didi Global, suffered sharp falls.
The alternative is for the Vision Fund to sell its ARM shares in the stock market over time, after it goes public. This option would take between one or two years for investors in the fund to receive the money from the sale, given the size of the package of titles held by VF1.
The fund returned to profitability last quarter thanks to notable investor interest in AI, which has boosted the value of some of the startups in which they had investments. However, its previous losses have failed to interest outside investors in its Vision Fund 2. A dividend payout like the one they would get from the sale of ARM to SoftBank could attract investors again. However, SoftBank has no intention of looking for new ones for now.
Negotiations are in the hands of SoftBank’s Board of Investment Advisory and Vision Fund’s Investment Committee 1. ARM’s exact valuation for the transaction both parties are working on is unknown, and according to various sources, there is a possibility of that an agreement is not reached. If it is reached, SoftBank would sell fewer ARM shares at the IPO, and may be left with a package of between 85% and 90% of the shares.
