Japan’s SoftBank is going to launch a second investment vehicle based on its mega popular $100 billion Vision Fund, according to a report by The Telegraph.
The new fund, like the previous one, is meant to spark investment in cutting-edge technology companies around the globe. It’s being backed by Saudi Arabia’s Public Investment Fund and possibly Abu Dhabi’s sovereign wealth fund, Mubadala Investment.
The new investors that join the fund will be able to work with older ones from the initial firm because SoftBank wants as many avenues as possible to raise money.
The initial Vision Fund was created in 2016 after SoftBank made a deal with Saudi Arabia’s Mohammed bin Salman to have the world’s biggest buyout operation. That Saudi Arabia connection was dealt a blow when the crown prince was accused of murdering journalist Jamal Khashoggi in 2018.
The fund has invested almost $70 billion in startups like Uber and WeWork. The creation of the fund has given tech companies a way to raise billions in private capital, instead of having to go public for funds. One of the drawbacks is a fear that all the money leads to valuations that are overinflated.
Chief executive of SoftBank, Masayoshi Son, has said that he wants to start a new $100 billion fund every two to three years to fund cutting-edge technologies like artificial intelligence. Son said that the first Vision Fund was very successful, with a 62 percent return on 71 total investments.
Saudi Arabia previously pledged $45 billion to the first fund, and it’s expected to give a similar amount to the new one, as will SoftBank.
In other SoftBank news, it was recently reported that the company is leading a $231 million funding round for a Brazilian lending startup called Creditas in a bid to shake up competition in the traditional financial market.
Creditas is now valued at $750 million, and the capital will help it to expand to other Latin American countries.
In Brazil, 82 percent of all assets are controlled by five banks. Creditas is aiming to change that.
“While there is huge demand for consumer lending in Brazil, the market is inefficient,” said Akshay Naheta, managing partner of SoftBank Investment Advisers, adviser to the Vision Fund.
A portion of the company’s proceeds are going to be used in other places in Latin America, like Mexico, where Creditas plans to offer asset-backed credit. There isn’t a lot of domestic credit offered in Mexico versus Brazil, with the rate being around 54.5 percent of gross domestic product. In Brazil, the rate is 114 percent.
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