SoftBank mobile unit to go for IPO raising some $20 billion

SoftBank mobile unit to go for IPO raising some $20 billion

"I would like to use the money raised through the IPO for additional investments in the Vison Fund and to pay back debt", SoftBank Group's Chief Executive Officer Masayoshi Son said at a press conference last week, referring to its almost $100 billion Saudi-backed fund.

SoftBank Group Corp has won approval to conduct a 2.4 trillion yen ($21.04 billion) initial public offering (IPO) of its Japanese telecoms business, in a deal that will seal the group's transformation into a top global technology investor.

Son in June argued that even without the domestic telecoms business, SoftBank shares should be worth over ¥14,000 - nearly 40% over their current price - considering the value of its investments in Alibaba, Arm Holdings, Sprint and Yahoo Japan, as well as Vision Fund.

"SBG [SoftBank Group Corp.] announces that it has decided on the disposal of a portion of SB [SoftBank Corp.] shares held by SoftBank Group Japan Corporation, a wholly owned subsidiary of SBG."

The amount could rise by 240.6 billion yen if demand triggers an overallotment, taking the total closer to the $25 billion that Alibaba raised in 2014 in the biggest-ever IPO. Chief Executive Masayoshi Son is ready to transform its mobile phone network service into one of the world's biggest players. It already has invested in Uber, WeWork and Slack, among other companies.

Masayoshi Son has the reputation of being a tech visionary. The price of the listing will be set on December 10. The entrepreneur also plans to raise similar funds every few years that invest around $50 billion a year in tech startups.

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SoftBank is wooing individual investors with a pledge to return 85 percent of its income to shareholders.

SoftBank's reposition comes at a time when the company has to rethink its strategy both in the Japanese and worldwide markets.

Investors have grown nervous about the lack of clarity in some of the investments by the $90bn Vision Fund.

Besides its diplomatic problems, the Japanese tech giant is also handling challenges at home.

While IPOs usually offer opportunities with relatively young companies with big growth potential, SoftBank's offering will provide investors with access to an established business with stable cash flow generated from its 40 million mobile subscribers. The company forecasts 700 billion yen ($6.1 billion) in annual operating profit across all its telecom operations.