Japan-headquartered telecommunications and internet group SoftBank plans to invest $25bn in a technology investment fund it will form with the Saudi Arabian government that could eventually reach $100bn in size, it announced today.
SoftBank will commit the capital over the next five years, while Saudi Arabia has signed a non-binding memorandum of understanding to invest up to $45bn through its Public Investment Fund (PIF) in the same period as the lead investment partner in the fund.
The two are currently in talks with some “large global investors” to add capital to the unit, known as Softbank Vision Fund, with a view to potentially growing it to $100bn.
Softbank Vision Fund will look to expand SoftBank’s ongoing growth through investments in technology companies that could form alliances with its group companies.
SoftBank has been around since 1981 but became a player in the tech space through shrewd early-stage investments in Yahoo and Alibaba, and other companies it has backed include mobile game developer Zynga, media companies Huffington Post and Buzzfeed, and fitness tracker maker Fitbit.
The firm has latterly been shifting away from smaller early-stage bets, winding down its SoftBank Capital unit in favour of larger growth-stage deals off its balance sheet, particularly in Asia where it is looking to grow its presence in the e-commerce and online services sectors.
Lately however, SoftBank seems to be aiming to diversify its holdings. It acquired semiconductor technology producer ARM Holdings for $31bn in July 2016, and earlier this week led a $130m round for microbe engineering technology developer Zymergen.
PIF, which was founded in 1971 as Saudi Arabia’s sovereign wealth fund, has generally invested in infrastructure, financial services and local utilities, but entered the tech space in June this year when it invested $3.5bn in Uber at a reported $62.5bn valuation.
The deal could not only hold a clue to the size of investments Softbank Vision Fund will seek but perhaps also the area, with Uber potentially one part of the solution to a country looking to reduce its domestic reliance on oil.