(June 10): SoftBank Group Corp’s talks with potential creditors to raise at least US$6 billion ($7.73 billion) from a margin loan backed by its OpenAI stake have stalled, people familiar with the matter said, just weeks after the Japanese conglomerate cut its initial target from US$10 billion.
The company is considering various fundraising options, according to the people, who asked not to be identified discussing private matters. It could still move forward with the margin loan at a later stage, they added.
It’s unclear why the margin loan discussions stalled. Borrowers and creditors can pause and revisit fundraising discussions for various reasons, and SoftBank hasn’t elaborated on its plans, the people said. SoftBank had secured some US$5 billion for the loan before the development, people familiar with the matter said, though it was unclear if those were verbal or written commitments.
SoftBank declined to comment.
The current inaction on the margin loan comes even after some of the potential lenders who had been pitched on it said that they’d started to consider it in a more favourable light, after news last month that the ChatGPT creator was preparing to file for an initial public offering. OpenAI said on Monday that it has filed confidentially for an IPO in the US, joining artificial intelligence rivals in tapping public markets to fund ambitious growth plans. The firm is working with Goldman Sachs Group Inc and Morgan Stanley on a potential listing as soon as in the fall.
Markets have witnessed a broader debate in recent months about SoftBank’s commitments of more than US$60 billion to OpenAI at a time when recent breakthroughs by rival Anthropic PBC have raised doubts for some investors about the business. Within SoftBank itself, some officials had grown anxious about that commitment.
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Previously some of the potential creditors pitched on the margin loan had expressed concerns about the difficulty of reaching a valuation for an unlisted company like OpenAI. SoftBank had downsized the loan’s initial target size by 40% after facing hesitation from some of the potential lenders, people familiar with the matter said in May.
The Japanese company has been ramping up its broader AI plans. Late last month, it said that it plans to invest as much as €75 billion (US$86.6 billion or $111.49 billion) to build artificial intelligence data centre capacity in France, saying the country is poised to become a top European hub for AI infrastructure.
Looming in the background is a US$40 billion bridge financing that supported the conglomerate’s investments in OpenAI, and which SoftBank must repay in March 2027. SoftBank has said that borrowing would likely be repaid “through the utilisation of existing assets and other financing measures”.
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More generally SoftBank has a number of potential fundraising options, though it’s unclear if it would opt to use any of them. Those include potential issuance of more bonds, or possibly borrowing against other listed holdings in its portfolio.
Its stakes include ones in Arm Holdings plc and Intel Corp, whose shares have jumped 197% and 192%, respectively, so far this year amid the AI boom. SoftBank Group’s stock has also surged about 46% this year, extending gains in recent weeks after the company reported a jump in quarterly profit due to valuation gains on its OpenAI investment. On June 1, SoftBank overtook Toyota Motor Corp as Japan’s most valuable company by market capitalisation.
The cost of insuring SoftBank’s debt against credit risks has also dropped in recent weeks. Its credit-default swaps have narrowed by about 61 basis points to 307 from a recent peak above 367 basis points on May 20.
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