SoftBank’s Son courts Gulf investors for up to $100bn AI fund

Key Points

1. Masayoshi Son is seeking up to $100bn from Gulf investors, sources told the Financial Times.
2. Talks in recent weeks included senior figures in the UAE, with no guarantee of success.
3. The money would fund acquisitions upgraded with AI, deepening SoftBank's already vast exposure.

The latest:

Up to $100bn is being sought from Gulf investors by SoftBank founder Masayoshi Son to finance a new push into artificial intelligence, people familiar with the matter told the Financial Times. The money would seed a fund that buys companies and then rebuilds their operations using AI and other advanced technology. Talks have taken place in recent weeks with senior figures including in the United Arab Emirates.

Details:

• The vehicle: Sources said the capital would establish a fund to acquire companies and improve their operations using AI and advanced technology. Roze, SoftBank’s robotics and physical AI business, is expected to play a key role, and Son hopes to take it public at a high valuation, though no timetable has been disclosed.
• No guarantee: The same people cautioned there is no certainty the Gulf talks will succeed. SoftBank declined to comment. Representatives of MGX, Abu Dhabi’s AI-focused fund, and AI holding company G42 did not respond to requests for comment.
• Gulf precedent: Son has drawn on Gulf money before. Abu Dhabi’s Mubadala and Saudi Arabia’s Public Investment Fund backed SoftBank’s first $100bn Vision Fund in 2017. Gulf states have been channelling energy wealth into AI to diversify, with Abu Dhabi among the world’s biggest spenders on the sector.
• The track record: The first Vision Fund had generated about $29bn in cumulative investment gains as of the end of June. Vision Fund 2, backed mainly by SoftBank and holding the OpenAI stake, has produced $20.5bn. Son’s failures include WeWork, which filed for bankruptcy in late 2023.
• The OpenAI bet: SoftBank has committed $65bn to OpenAI. The ChatGPT maker has delayed its long-anticipated initial public offering, citing risks around AI development, a decision the Financial Times reported could complicate SoftBank’s plans for fresh AI investments.
• The debt side: Son has combined fundraising with borrowing partly backed by SoftBank’s stake in chipmaker Arm. Last month the group completed the largest junk bond offering on record, paying yields as high as 9.75 per cent to raise more than $11bn.
• Balance sheet: SoftBank’s net asset value stood at ¥72.3tn at the end of June, with a loan-to-value ratio of 13 per cent, well under the 25 per cent ceiling targeted in normal operations. Its borrowing capacity is tied to the valuations carried on that balance sheet.
• The share price: SoftBank stock remains up 25 per cent this year but has fallen more than 30 per cent since peaking in June, when it briefly became Japan’s most valuable company. Shares dropped 5 per cent on Friday after the Financial Times reported OpenAI’s annualised revenue was about $20bn below what the company had signalled.
• Son on the risks: Son has dismissed AI sceptics, saying in July that those who condemn the technology are spitting upwards. He has since acknowledged that in the hands of bad actors it could become, in his words, “super dangerous”.

Background:

Son has rebuilt SoftBank repeatedly, first as a telecoms group, then through the Vision Funds, and now as one of the world’s largest backers of AI. His biggest win remains Alibaba; critics have long described his style as closer to gambling than investing.

Between the lines:

The approach to Gulf capital arrives as SoftBank’s own currency weakens: shares down more than 30 per cent from June, record-cost junk debt last month, and a delayed OpenAI listing. One Asia-based analyst told the Financial Times a contagion effect could escalate quickly if OpenAI’s valuation falls, given how much of SoftBank’s portfolio is tied to it. Senior SoftBank figures say short-term valuation swings will not alter investment plans.

What’s next

Watch whether the Gulf talks produce a commitment, the timing of Anthropic’s expected IPO in coming weeks, any revised OpenAI listing schedule, and SoftBank’s next disclosure of net asset value and loan-to-value ratio.