SoftBank moves to sell down its stake in Alibaba

This is an audio transcript of the FT News Briefing podcast episode: SoftBank moves to sell down its stake in Alibaba

Joanna S Kao
Good morning from the Financial Times. Today is Thursday, August 4th, and this is your FT News Briefing.

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Joanna S Kao
The world’s largest tech investor is backing away from Alibaba. Diplomats from Iran and the west are looking to restart nuclear talks, and many companies have been encouraging employees to bring their whole selves to work.

Andrew Edgecliffe-Johnson
A lot of managers are now realising that has some problematic aspects as well.

Joanna S Kao
We’ll talk about the rise of political conflict in the workplace. I’m Joanna Kao, in for Marc Filippino, and here’s the news you need to start your day.

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Joanna S Kao
SoftBank is planning to dramatically reduce its stake in China’s ecommerce giant Alibaba. This would be a big move. The Japanese tech group was one of Alibaba’s earliest investors. The FT’s Ryan McMorrow explains that SoftBank is doing this by raising $22bn for something called prepaid forward contracts.

Ryan McMorrow
They’re doing it in this very complicated manner where they’re essentially selling the shares now into this entity, but retaining the ability to buy back the shares in two years' time if they want to. Masayoshi Son, the chairman of SoftBank, has been side by side with Jack Ma, the founder of Alibaba, over the past two decades since he started the company. So it’s definitely a big deal that they are now selling down their stake. And if all of these shares roll over, they could be down to about 10 per cent.

Joanna S Kao
Why is SoftBank doing this? Did something happen to the relationship between Son and Ma?

Ryan McMorrow
No. It’s more about the, just turmoil in the, in the markets in SoftBank. Last year, their last fiscal year, had a huge $27bn loss in their Vision Fund. And so they’re just trying to play defence as all their holdings get hit. And Alibaba is really the only large asset they have that they can tap for cash, which is what they’re doing now.

Joanna S Kao
So it’s purely a financial decision then?

Ryan McMorrow
Yeah, well, I guess it’s probably more than a financial decision, too, because it’s, they’re also, at the same time, hedging their bets on China. It’s clear that SoftBank is wary of investing further in China. Aliba . . . their Alibaba stake has just gotten destroyed with the tech crackdown. Same with their huge stake in Didi, the ride-hailing group here.

Joanna S Kao
OK. So what does SoftBank’s move mean for Alibaba?

Ryan McMorrow
The big impact will come in two years’ time. SoftBank has been doing these derivative contracts. They’re called prepaid forward contracts and SoftBank has been selling its Alibaba shares into them for a while. But this year they’ve been selling their shares into these prepaid forward contracts at a record pace so that when they all come due in 2024, it’ll be essentially flooding the market with a huge number of Alibaba shares, if they don’t buy them back.

Joanna S Kao
That’s our China technology reporter, Ryan McMorrow.

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Joanna S Kao
Iran is set to resume nuclear talks with world powers this week in Vienna. Former President Donald Trump pulled the US out of the pact four years ago. Diplomats will make another effort to save the 2015 accord and limit Iran’s nuclear activities. But talks have been floundering. Washington and Tehran have been indirectly negotiating a deal that would lead the US to rejoin the nuclear accord. The two sides are in a stalemate. Iran wants a guarantee that the US won’t unilaterally abandon the deal in the future, and it wants more sanctions relief. Meanwhile, President Joe Biden says he won’t take Iran’s elite Revolutionary Guards off the US terrorism list.

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Joanna S Kao
There is a management mantra that’s become popular. It goes: Bring your whole self to work. Companies want employees to feel comfortable being themselves in the office. For more and more people, that means voicing political views, and that’s causing conflicts that companies are struggling to manage. To find out more, I’m joined now by the FT’s US business editor Andrew Edgecliffe-Johnson. Hey, Edge.

Andrew Edgecliffe-Johnson
Hi. Thanks for having me.

Joanna S Kao
So what did you find is happening in workplaces?

Andrew Edgecliffe-Johnson
What’s happened in recent years is we’ve seen poll after poll showing people, particularly in the US, getting more and more polarised in their views of politics. Some polls you read and you think people really hate each other now. There is a real difficulty in understanding the point of view of people who vote for the other party, who thought differently about Donald Trump or Brexit or whatever the subject of the day may be. As people are getting more vocal about their opinions, these opinions that they once might have saved for drinks with their friends in the evening are now spilling over into management problems.

Joanna S Kao
What kind of political issues are causing these workplace tensions?

Andrew Edgecliffe-Johnson
Well, one of the hot topics in the US right now is the Supreme Court’s recent decision to overturn Roe v Wade, the abortion ruling that had held for about 50 years. That’s deeply animated people on both sides of the debate, and they are discussing it in the workplace and discovering that many of their workmates have profoundly different views from their own. But what we’re seeing more generally, according to senior people who work in human resources, is that more and more commonly, you’re finding people leave jobs because they feel they don’t fit in. You’re finding people actually not joining companies because they’re worried they might not fit into the culture. And you’re finding people going running to HR complaining that the guy who sits next to them has offensive views, and they can’t work together. Most importantly, I think the reason is companies are realising the cost of this kind of division at a time when they’re already struggling to hold on to people. We’ve seen that a generation of workers is increasingly gravitating towards companies which they feel share their values.

Joanna S Kao
That’s a really good point you bring up because companies are being more open about their values, and they’re under pressure to do so from activist movements and environmental issues and social responsibility. You know, ESG, it’s huge for the business world. We talk about it all the time.

Andrew Edgecliffe-Johnson
So I think the ESG backdrop is an important one. I spoke to the head of the Society for Human Resource Management in the US who said, actually we’ve realised that some of our efforts to improve diversity have come at the expense of inclusion. We haven’t yet fully worked out how to make sure that a more diverse workforce automatically feels included in the debates and doesn’t generate a backlash to these efforts to diversify the workplace.

Joanna S Kao
And when you say diversity, you’re not talking about, you know, different races or sexual orientations. You’re talking about diversity of political beliefs, right?

Andrew Edgecliffe-Johnson
Yes, companies have this rather airy phrase that diversity of thought being equally important as diversity of background. And there’s all sorts of management research suggesting that if you have diverse ideas in the room, it can drive innovation. The problem is if the people who hold these diverse ideas fundamentally hate each other and mistrust each other’s ideas, that creates the opposite. It creates stagnation.

Joanna S Kao
So how have companies been managing political disagreements among their workers?

Andrew Edgecliffe-Johnson
So we’ve seen some very high-profile companies like Meta, which owns Facebook, and Coinbase and Basecamp just say, don’t talk about politics at work at all. Now, what we’ve seen is that those attempts to ban free speech essentially about politics have almost all backfired. People have leaked to the press. We’ve had walkouts at Coinbase and Basecamp in the last couple of years over this. When Goodyear told people not to wear political clothing, including Donald Trump’s “Make America Great Again” hats, there was a huge uproar, including a tweet from the former president. So this is a very dangerous path to tread for companies. What most experts seem to be saying now is you have to manage these divisions, and you have to create a company culture where different opinions are respected, where there is empathy for your fellow colleague. But that has to be earned through civility. So it’s about disagreeing, but disagreeing well.

Joanna S Kao
Andrew Edgecliffe-Johnson is the FT’s US business editor. Thank you as always, Edge.

Andrew Edgecliffe-Johnson
Thanks for having me.

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Joanna S Kao
You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.