SoftBank to post $34 billion gain as it cuts Alibaba stake to 14.6%

TOKYO, Aug 10 (Reuters) – SoftBank Group Corp (9984.T) said on Wednesday it would book an estimated 4.6 trillion yen ($34.08 billion) gain on the settlement of prepaid futures contracts using shares of Alibaba Group Holding (9988.HK), reducing its stake to 14.6% from 23.7%.

SoftBank posted a record quarterly net loss on Monday due to falling valuations at its investment arm Vision Fund, with chief executive Masayoshi Son pledging to further reduce investment activity and cut costs.

The estimated gain announced Wednesday includes 2.4 trillion yen from the revaluation of shares in the Chinese e-commerce giant and a derivative gain of 0.7 trillion yen, SoftBank said in a filing.

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The transaction “will be able to eliminate concerns about future cash outflows and additionally reduce the costs associated with these prepaid futures contracts,” SoftBank said.

“These will further strengthen our defense against the challenging market environment,” SoftBank added.

Son bought Alibaba for $20 million in 2000 and the Chinese company’s growth into one of the world’s largest e-commerce companies has helped boost its credentials as a tech investor.

But Alibaba has lost more than two-thirds of its value from late 2020 highs, hit by Beijing’s crackdown on the tech sector and its scrutiny of founder Jack Ma.

The SoftBank transaction is not expected to result in further sales of Alibaba shares in the market as the shares were hedged at the time of initial monetization, SoftBank said.

Ties between the two companies have weakened, with Ma leaving SoftBank’s board in 2020 and Son leaving Alibaba’s board the same year.

The Japanese billionaire, who has also bet on companies such as ridehailer Didi Global, sought to highlight the shrinking size of Chinese tech in his portfolio as market turmoil hit valuations and US-China tensions escalated. increase.

($1 = 134.9700 yen)

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Reporting by Sam Nussey; edited by Andrew Heavens, Jason Neely, Louise Heavens and Barbara Lewis

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Lucas E. Kelly