SoftBank, Saudi Arabia’s PIF launch $100bn tech fund

Japanese telco giant SoftBank aims to be the biggest technology investor with its latest private equity fund.

Tokyo-based telecommunications and internet company SoftBank Group Corporation has a formed a new investment fund and is looking to raise up to $100 billion to invest in technology companies globally, the firm said in a statement.

The SoftBank Vision Fund will be the largest private equity fund to date. China’s recently-launched $52.5 billion state-owned Enterprise Restructuring Fund will come in second, and Blackstone’s 2006-vintage, $21.6 billion buyout fund takes third place.

Only $27.4 billion or about a third of the target of SoftBank’s massive tech fund has been raised by global venture funds in the first two quarters of 2016, according to data compiled by venture capital database CB Insights and KPMG International.

SoftBank has teamed up with the Public Investment Fund (PIF) of the Kingdom of Saudi Arabia for the fund. Under the agreement signed on 12 October, SoftBank will invest up to $25 billion while PIF will consider becoming the lead investment partner, thereby committing up to $45 billion to the fund over the next five years. SoftBank is also in talks with large global investors for the remaining fund commitments, it said in a statement.

“With the establishment of the SoftBank Vision Fund, we will be able to step up investments in technology companies globally,” SoftBank chairman and chief executive Masayoshi Sun said. “Over the next decade, the SoftBank Vision Fund will be the biggest investor in the technology sector.”

Details about the fund’s strategy have yet to be disclosed.

The company, with more than 20 trillion yen ($199 billion; €181 billion) under management, is best known for its global acquisitions in the telco and internet space. In September SoftBank made its largest-ever investment, acquiring British chip maker ARM Holdings for £24 billion ($31 billion; €28 billion). In 2013 the company invested $21.6 billion in US telco company Sprint, and in 2006 acquired the Japanese unit of British mobile phone company Vodafone for $15 billion.

Rajeev Misra, head of strategic finance at Softbank, will lead the SoftBank Vision fund from a UK-based subsidiary of SoftBank. The former head of Deutsche Bank’s financing and solutions group Nizar Al-Bassam and ex-Goldman Sachs partner Dalinc Ariburnu are also involved in the fund.

PIF is managed by the Council of Economic and Development Affairs, led by Saudi Arabian prince Mohammed Bin Salman Bin Abdulaziz. The investment is in line with the country’s Saudi Vision 2030 strategy announced in April this year that aims to end the country’s dependence on oil by 2020. To achieve this, the kingdom plans to sell less than 5 percent of state oil company Saudi Aramco, valued at about $2 trillion. The proceeds from the sale would be controlled by PIF, thereby creating the world’s largest sovereign wealth fund.