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10 big investment of Softbank that can make it bigger than Apple

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SoftBank has embarked on an aggressive acquisition campaign to boost its research and development capabilities.

The group is backing the $93 billion Vision Fund, the world’s largest private equity fund, which seeks to invest in technologies expected to grow significantly in the near future, such as robotics and artificial intelligence.

Softbank founder known as ambitious deal maker, his deals sometimes comes as surprise for investors as well. He is known for riding against the wave and is a visionary strategist in tech sphere.

Popularly known as Masa, Masayoshi Son is aggressive leader and according to his close aide, when he wants what he wants, he gets that.

Softbank has many big name in its portfolio across the world. In December 2014, Masayoshi Son, founder of Japanese internet giant SoftBank Group said that his group would invest $10 billion in the Indian market by 2024.

Here is the list of some of the big strategic investment that soft bank has done over the period.

  1. Alibaba 

This investment of Soft bank is considered as one of the most profitable investment in startup arena. In October 1999, Soft bank was transformed to holding company. In 2000, Soft Bank made $20 million investment to a then fledgling Chinese Internet venture Alibaba. This $20 million investment turned into $60 billion when Alibaba went public in September 2014.

Alibaba is now the world’s largest retailer with operations in over 200 countries, Its online sales and profits surpassed all US retailers (including Walmart, Amazon and eBay) combined since 2015.

It has diversified into one of the largest Internet and AI companies, one of the biggest venture capital firms and one of the biggest investment corporations in the world.

While acquiring by investing 20 million the founder and chief executive officer of Alibaba JackMa said

“We didn’t talk about revenues; we didn’t even talk about a business model, We just talked about a shared vision. Both of us make quick decisions”

referring Masayoshi Son the president and CEO of Softbank.

Softbank still owns 29.5% stake in Alibaba. As of June 2018, Alibaba’s market cap was at US$542 billion.

 2. Sprint (2013)

Sprint Nextel Corporation commonly known as Sprint is an American Telecommunication company which was having strong foothold in US market.

By the time of acquisition by Softbank, Sprint were having customer base of more than 55 million. It was engaged in developing, engineering and deploying innovative technologies, including the first wireless 4G service, mobile data services, prepaid services.

Along with SoftBank, Dish Network was also in bidding war for acquisition but SoftBank finally closed deal in $21.6 billion. Later SoftBank purchased further 2% shares of Sprint thus taking its ownership stake in the company to 80%.

 

3. ARM (2016)

ARM is a well known established brand in semiconductor world. This European technology company was acquired by Softbank in 2016 for more than US$32 billion.

In 2015 ARM alone shipped 15 billion chips out of which half was dedicated for mobile phones.

It was a huge deal and although ARM was not having significant revenue compared to its competitors like Intel, it was having substantially upper edge when it comes to mobile platform. ARM designs chip and make revenue from licensing them to companies like Apple and Samsung.

After acquiring ARM holding, In June 2018 SoftBank sold 51 per cent of chip designer Arm’s Chinese subsidiary to a China-led group of investors in a deal worth $775.2m. It is expected that strained trade relations between China and the US could be the reason behind this.

With the acquisition in Artificial Intelligence, Robotics domain and mobile equipment it is expected that SoftBank has bigger plans for ARM concerning Internet of Things and 5G. This long term deal is surely going to give another Alibaba moment to Softbank.

4. Boston Dynamics (2017)

In 2013 Google bought seven robotics companies in one go and later Boston Dynamics and Schaft under its parent company Alphabet robotics umbrella. Earlier google were having investment in self driving car often termed as robotics car but this acquisition was signaling that Google has some big plan for its robotics division.

Even after 4 year Google started realizing that its vision is still unclear regarding robotics. Decade old companies like Boston Dynamics were not serving any purpose of integration with Google products although at individual level they keep coming up with new tech. They finally found new owner when SoftBank stepped in to acquire Boston Dynamics and Schaft.

Earlier, In 2013, the company had brought a controlling stake in French company Aldebaran Robotics, which was re branded as SoftBank Robotics. In 2014, teams from both companies co-designed Pepper, a humanoid robot. In 2015, SoftBank increased its stake to 95% of Aldebaran Robotics.

Why these two?

Although the robots are yet to be proved viable for commercial usage, these companies have capability in developing physical robo assets backed by reliable software that can perform useful tasks outside of structured environments.

Concerning acquisition Son said

“Smart robotics are going to be a key driver of the next stage of the Information Revolution and clearly Boston Dynamics is technology leaders in advanced dynamic robots”

5. Vodafone Japan

Vodafone had entered Japan telecom market with largest ever Foreign direct investment by acquiring J-Phone in 2001.

At the time J-Phone were having more subscriber base than Vodafone were having in entire UK. In the next 5 year Vodafone Japan invested about $5.2 billion in upgrading its systems and built 14,000 base stations but Vodafone Japan was strongly hit by unfair allocation of spectrum by the Japanese government for 3G network. It was allotted 2.1 Ghz range spectrum that was too high.

For the efficient 3G wave propagation to have uniform coverage, Vodafone estimated it would need additional 25,000 base station. Vodafone Japan keep loosing 3G markets thereafter.

Japan was Vodafone’s largest mobile market in terms of subscribers, but compared to other markets in which the company operated, the profit margins in Japan were very low. In 2006, Softbank agreed to buy Vodafone’s struggling Japanese moble phone unit for $15.3 billion which at that time was third-largest mobile phone operator in the country.

The acquisition brings Softbank about 15.1 million customers and a 17% share of Japan’s cellular market.

6. Supercell

In 2013, 51% acquisition for $1.51 billion then and again in 2015, 73.2%

Supercell is a mobile game company headquartered in Finland. Their two game apps, Clash of Clans and Hay Day were Top Grossing ranking of Apple’s App Store in 137 countries and 96 countries, respectively thus making it No.1 publisher in the world among the apps in the Games category of the App Store in 2013.

In 2013, SoftBank buys 51% stake in Supercell costing at $1.5 billion thus valuing 3-year-old Supercell, with about 100 employees and just two free-to-play games to $3 billion.

SoftBank was already in gaming world with its subsidiary GungHo Online Entertainment Inc, which were having very successful gaming portfolio.

Supercell’s blog termed this acquisition as SoftBank “quest to become the #1 mobile Internet company”.

In 2014 only, the earning of Supercell get tripled and later in 2015 SoftBank buys additional shares from existing external investors thus increasing its stake in Finnish Gaming wizard to 73%.

In 2016, SoftBank sold all of its share to China’s biggest gaming group Tencent Holding Ltd. Tencent Holding Ltd came forward to buy 84.3% majority of stock in Supercell for $8.6 billion. This deal was termed as one of the world’s biggest ever gaming deals.

7. Yahoo! Japan

Masayoshi Son is considered as visionary who brought internet services to Japan on a larger scale.

Yahoo was founded on 1994 and then Softbank who was manufacturer and distributor of computer parts join hands to form Yahoo! Japan in January 1996. Yahoo! Japan becomes first web portal of Japan.

In 1996, SoftBank made a joint venture with rising American internet company Yahoo!, creating Yahoo! Japan, which go on to become a dominant site in the country. With this, it become crucial in Japan’s $78 billion mobile market.

8. Flipkart, Snapdeal and Paytm

SoftBank investment in Indian firm begins with inMobi in 2011. Founded as global mobile advertising platform in 2007, It had invested $200 million.

“I am delighted at this opportunity to partner with InMobi, one the world’s largest mobile ad networks”, said Masayoshi Son, Chairman and CEO of Softbank said.

After that then under vice-president Nikesh Arora, SoftBank made significant investment in Indian startup ecosystem. In October 2014, India’s leading cab aggregator Ola received $210 million investement juice from Softbank. Since then Ola laid expansion to new countries along with the acquisition of TaxiForSure and Foodpanda, food delivery platform.

Snapdeal was the first e-commerce marketplace in India which received by fiunding from SoftBank. SoftBank invested around $650 million in total to this India e-commerce gaint which was valued at $6.5 billion at its peak. Snapdeal is struggling to keep the pace with FlipKart and Amazon in higly competitive Indian ecommerce market space.

On 18 May 2017, Softbank completed its single largest investment in India to date, investing $1.4 billion in India’s largest digital payments startup Paytm for 20% stake in the company. With the push of digitisation and backing of Alibaba this Indian unicorn is on front as emerging leader of ecommerce and digital payment arena.

On 10 August 2017, Softbank struck a deal to buy a 20% stake in Flipkart by investing $2.5 billion. Softbank was earlier seeing Snapdeal as bigger competitor to Flipkart and at the time american Investment firm such as Tiger Global were very aggressive in investing in India startup. With the loosing foothold of Snapdeal and emergence of Amazon as main competitor Softbank finally invested in FlipKart eyeing long term growth in Indian ecommerce.

9. Uber
SoftBank has previously pumped billions into several ride-hailing companies abroad, like Didi in China, Grab in Southeast Asia and 99 in Brazil and Ola in India. Uber had stormed taxi world with its ride-service offering. 2017 was really controversial for Uber. Uber work culture comes under radar after sexism and harassment charges. Uber had also been facing significant legal battles. Its CEO Kalanick stepped down in June, following mounting public pressure.
On 14 November 2017, Softbank finally agreed to invest $10 billion into Uber

10 Softbank Vision Fund

Led by “Angry Birds” maker Rovio, Finland’s gaming industry has been a rare bright spot in a small Nordic economy which has struggled with a decline in traditional industries such as paper and machinery as well as the decline of Nokia, once the world’s biggest handset maker.

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