SoftBank completes $30 billion OpenAI investment, lifting stake to 13%

Summary

• SoftBank said it finished paying the full $30 billion it pledged to OpenAI's latest round.
• The money arrived in three $10 billion tranches through SoftBank's Vision Fund 2.
• Cumulative exposure now reaches $64.6 billion, making SoftBank one of OpenAI's largest single backers.

The latest

SoftBank Group has paid out the final tranche of a $30 billion commitment to OpenAI, completing its share of the ChatGPT maker's most recent fundraising round, the Japanese conglomerate said Thursday. The payments were structured as three instalments of $10 billion each through Vision Fund 2. The deal lifts SoftBank's total investment in OpenAI to $64.6 billion.

Details

• The stake: SoftBank's cumulative investment of $64.6 billion gives it a 13% holding in OpenAI, according to Reuters. That makes the Tokyo-based group one of the largest outside shareholders in the AI developer, and the position is now built almost entirely on capital committed within the past year.
• The round: OpenAI secured $122 billion in commitments earlier this year at a valuation of $852 billion, Reuters reported. Amazon, Nvidia and SoftBank anchored that fundraising, meaning SoftBank's $30 billion accounted for roughly a quarter of the total pledged capital.
• How it was funded: SoftBank raised $11.1 billion last month in what Reuters described as the largest high-yield corporate bond sale globally, proceeds earmarked for the OpenAI commitment. The group turned to the junk-bond market rather than equity to cover a payment schedule already locked in by contract.
• Bridge loan trimmed: The company has canceled the remaining $10 billion of undrawn capacity under a $40 billion bridge loan arranged earlier this year, according to Reuters. The cancellation suggests the financing package assembled for the OpenAI tranches left SoftBank with capital it ultimately did not need to draw.
• Son's strategy: Founder Masayoshi Son has pushed to turn SoftBank into a dominant investor in artificial intelligence, and the OpenAI position is now the centerpiece of that effort, Reuters reported. The group has become one of the world's biggest financial backers of the company led by Sam Altman.
• The vehicle: All three tranches moved through Vision Fund 2, the successor to the fund whose earlier bets on WeWork and other startups produced heavy writedowns. SoftBank did not break out how much of Vision Fund 2's capacity the OpenAI payments consumed.
• Not disclosed: SoftBank's announcement did not specify the valuation at which each individual tranche was priced, nor whether the 13% stake carries board representation or governance rights at OpenAI. No further funding commitment to the company was announced alongside the completion.

Background

OpenAI has moved from research lab to one of the most heavily capitalized private companies in the world, raising successive multibillion-dollar rounds to fund compute and model training. SoftBank first emerged as a major backer during that shift.

Between the lines

The funding mechanics tell their own story: a record high-yield bond sale to raise $11.1 billion, alongside the cancellation of $10 billion in unused bridge-loan capacity, points to a group that assembled more financing headroom than the tranche schedule finally required. With $64.6 billion committed for a 13% holding, SoftBank's balance sheet is now tied unusually tightly to the performance of a single private company.

What's next

Watch SoftBank's next quarterly results for how the OpenAI stake is carried and valued, any further bond issuance tied to AI commitments, and whether OpenAI opens another fundraising round at a revised valuation.

Source: Reuters