SoftBank's OpenAI bet and rising debt raise liquidity-crunch fears
Investors are voicing liquidity concerns about Masayoshi Son's SoftBank as it commits up to $30 billion to OpenAI and its borrowings climb sharply. SoftBank shares fell 10% in Tokyo trading and chip unit Arm shed more than $30 billion in market value in a few sessions.
CNBC Top NewsSoftBank Group shares listed in Tokyo fell about 10% on Wednesday. The drop reflected concerns about the scale of the conglomerate's pledged investment in artificial-intelligence firm OpenAI and the impact of fast-rising borrowings on liquidity. Investors also pointed to the sharp recent sell-off in SoftBank's chip subsidiary Arm Holdings, which has shed more than $30 billion in market value over a few weeks.
According to CNBC, SoftBank has agreed to contribute up to $30 billion to OpenAI's latest funding round. The commitment absorbs much of the group's cash position and is forcing it to expand new borrowing lines. Data from Visible Alpha shows SoftBank's gross debt stock has crossed 30 trillion yen. Daiwa Kanaya, an analyst at Bridge Securities, wrote: 'Liquidity ratios are losing their usual buffers; without asset sales, the group cannot meet all the commitments.'
The group says the OpenAI investment is essential to long-term returns. Mr Son told investor calls that the Stargate data-centre project will define the next decade. In the near term, however, SoftBank is reportedly weighing options including pledging part of its Arm stake and reducing its position in T-Mobile US. The next quarterly update is scheduled for 7 August; investor attention will focus first on the debt schedule and cash flow.
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