Germany’s Daimler is among a group of new international investors who have committed to backing Softbank’s $100bn Vision Fund, allowing Japanese billionaire Masayoshi Son to close the world’s biggest technology investment vehicle.
The Mercedes-Benz carmaker will join three Japanese banks — MUFG, Mizuho and Sumitomo Mitsui Banking Corp — Oracle co-founder Larry Ellison, and the sovereign wealth fund of Bahrain to fill the last $7bn needed to reach the fund’s $100bn goal, according to people briefed on the negotiations.
SoftBank is also debating internally when it should begin fundraising for its next fund, one of these people said, which is expected to be named Vision Fund II.
Mr Son’s ability to close out financing for the $100bn vehicle in just over a year comes as rival investors question whether his tech-focused strategy has pumped too much capital into unproven start-ups, distorting valuations to unsustainable levels.
It also comes as Mr Son’s relationships — and his network of backers in China, Saudi Arabia and the United Arab Emirates — have raised regulatory scrutiny in the US, where transfer of sensitive technologies abroad has become a focal point for the White House.
Mr Son, who started SoftBank in the 1980s as a small Japanese software distributor and transformed it into one of the most influential technology investors in the world, is also set to make a personal investment and create structures that allow the company’s executives to participate in the fund.
The Vision Fund was formally launched with the backing of the state investment fund of Saudi Arabia in October 2016, when it announced the goal of hitting $100bn.
Daimler and the Japanese banks are set to be among the smaller investors in the fund, alongside earlier participants such as Apple, Qualcomm, Foxconn and Sharp. About $88bn of the fund comes from SoftBank, Saudi Arabia and Abu Dhabi.
Daimler has been among the most active carmakers investing in ride-hailing and car-sharing platforms in recent years.
In 2014 it acquired MyTaxi, a cab-hailing service that now has 70m passengers in Europe. Last year it acquired Chauffeur Privé in France, a rival to Uber. It also owns the car-sharing company car2go. To build up scale, Daimler and BMW announced in March that they would merge their new mobility services on everything from electric vehicle charging to ride-hailing.
Individuals close to the three Japanese banks said their investment was motivated by their quest for returns in Japan’s environment of ultra-low interest rates and the desire to further strengthen their relationships with what is by far Japan’s most active corporate name.
All the new investors will be participating under the terms of the fund’s unusual structure, which sees them receive 62 per cent in preferred units paying out an annual coupon of 7 per cent over the fund’s 12-year life cycle, and the rest with equity.
SoftBank itself is the only investor that has full equity exposure, giving it the most upside to the fund’s investments in addition to the management and performance fees.
SoftBank outlined on Wednesday in a presentation that it had spent $29.7bn of the Vision Fund since inception. It has placed bets on more than 30 companies including Uber, shared-office provider WeWork and chipmaker Nvidia.
SoftBank, Daimler, the Japanese banks and a spokesperson for Mr Ellison declined to comment. Representatives of Bahrain’s sovereign wealth fund were not immediately available for comment.
Additional reporting by Kana Inagaki in Tokyo, Simeon Kerr in Dubai and Richard Waters in San Francisco
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