A partial retreat of the Saudi sovereign wealth fund and Mubadala would complicate fundraising for SoftBank’s Chief Executive Officer Masayoshi Son, who upended venture capital by making huge bets on promising yet unproven companies and spurring others to follow suit.
Tuesday 17, September 2019
The biggest backers of SoftBank Group’s Vision Fund are reconsidering how much to commit to its next investment vehicle as an oversized bet on flexible workspace provider WeWork sours, reported Bloomberg.
Saudi Arabia’s Public Investment Fund, which contributed $45 billion to the $100 billion Vision Fund, is now only planning to reinvest profits from that vehicle into its successor, while Abu Dhabi’s Mubadala Investment Company, which invested $15 billion is considering paring its future commitment to below $10 billion.
Perhaps more than any other start-up, WeWork has come to symbolise that brash style, and the success or failure of its initial public offering (IPO) is likely to impact Son’s ability to raise cash for future deals.
PIF executives are still considering options and no final decision has been made and Mubadala said that discussions are continuing on whether or not any investment will take place.
Brian Lott, a spokesman for Mubadala, said, “The suggestion we have made any decisions on the size or timing of a potential investment is simply unfounded, our discussions continue at an appropriate and deliberate pace, given the importance of this effort.”
The Wall Street Journal previously reported that Saudi Arabia’s sovereign wealth fund wasn’t planning to be a significant investor in the new fund but may still make a more modest commitment. A decision to only reinvest proceeds from the first fund would mark a significant shift. Saudi Arabia’s Crown Prince Mohammed bin Salman said last October that he planned to invest another $45 billion into any new fund.
WeWork is one of SoftBank’s flagship investments, along with Uber Technologies as well as Slack Technologies and UK chipmaker ARM Holdings. SoftBank, which with its affiliates, owns a 29 per cent stake, and in January invested at a valuation of $47 billion, more than triple the $15 billion that is currently being discussed in an IPO.
In July 2019, SoftBank said that other investors had expressed interest in pledging a combined $108 billion for the second Vision Fund, though that was before WeWork forged ahead with plans for an IPO. The new fund is expected to collect money from Apple, Microsoft as well as Foxconn Technology Group and various Japanese financial institutions, with seven having signed MoUs to participate.