Softbank's Mayoshi Son gets $93 bn for Vision Fund from major investors

Masayoshi Son's SoftBank Group Corp has closed the first round of a planned $100-billion technology investment fund, called the SoftBank Vision Fund - the world's largest private equity fund.

The fund, backed by Saudi Arabia's main sovereign wealth fund, said on Saturday it had raised over $93 billion to invest in technology sectors such as artificial intelligence and robotics.

Abu Dhabi, Apple Inc, Qualcomm Inc, Taiwan's Foxconn Technology and Japan's Sharp are other investors in the Vision Fund, which gives the 59-year-old Son access to a pool of capital unparalleled in the worlds of private equity or venture capital.

"The next stage of the Information Revolution is under way, and building the businesses that will make this possible will require unprecedented large-scale, long-term investment," the SoftBank Vision Fund said in a statement.

Japanese billionaire Son, chairman of SoftBank, a telecommunications and tech investment group, revealed plans for the fund last October and since then it has obtained commitments from some of the world's most deep-pocketed investors.

Abu Dhabi's Mubadala Investment has committed $15 billion. The amounts invested by Apple, Qualcomm, Foxconn and Sharp have not been revealed.

The new fund made its announcement during the visit of President Donald Trump to Riyadh and the signing of tens of billions of dollars worth of business deals between US and Saudi companies. Son was also in Riyadh on Saturday.

After meeting with Trump last December, Son pledged $50 billion of investment in the United States that would create 50,000 jobs, a promise Trump claimed was a direct result of his election win.

The fund may also serve the interests of Saudi Arabia by helping Riyadh obtain access to foreign technology. The Saudi economy has been severely damaged by low oil prices, and policymakers are trying to diversify into new industries, Reuters reports.

The new fund said it would seek to buy minority and majority interests in both private and public companies, from emerging businesses to established, multi-billion-dollar firms. It expects to obtain preferred access to long-term investment opportunities worth $100 million or more.

Other sectors in which the fund may invest include mobile computing, communications infrastructure, computational biology, consumer Internet businesses and financial technology.

The fund aims for $100 billion of committed capital and expects to complete its money-raising in six months, it added.

Son isn't one for understatement, Bloomberg notes. He has said, without irony, that he has a 300-year plan for SoftBank and aims to build the world's most valuable company. With the Vision Fund, Son vows to become the biggest investor in tech over the next decade, as he bets on the future of artificial intelligence, connected devices, satellites and the integration of computers and humans.

In April, he led the $5.5 billion investment in China's Didi Chuxing, the largest venture funding on record.

''We saw a big bang in PCs, we saw a big bang in the internet,'' Son said in February on a call with shareholders. ''I believe the next big bang is going to be even bigger. To be ready for that, we need to set the foundation and that foundation is SoftBank Vision Fund.''

Son's mega-fund will unleash an unprecedented amount of money into sectors already seen as overcapitalized, says Bloomberg. Private equity returns have plummeted in recent years because there's too much money chasing too few deals. Venture capital faces similar issues.

Private equity firms are sitting on record piles of cash. The amount of unspent money hit $820 billion at the end of 2016, up from $755 billion a year earlier, according to the research firm Preqin. The venture total hit $142 billion, compared with $127 billion at the end of 2015.

Thus, Son may be more than the most powerful investor in tech - he may be the most dangerous too. A flood of capital into artificial intelligence or driver-less cars, can inflate valuations and spawn too many competitors, leaving everyone struggling to make money.

Defying expectations
Son has spent his life defying expectations, Bloomberg notes. He left Japan at 16 to study in the US and ended up at the University of California at Berkeley. While in school, he invented an electronic translator that he sold to Sharp, making his first $1 million.

Son founded his own company in 1981 and began to distribute software for companies like Microsoft Corp. He then built it through a series of high-stakes bets. In a deal that would supply him with cash for other investments, he acquired Vodafone Group Plc's struggling Japan business and turned it into a profit machine.

His fearlessness almost cost him his company. During the internet bubble, he invested in about 800 companies, vowing to create a ''netbatsu'', the digital age equivalent of Japan's zaibatsu industrial conglomerates bound by cross-share ownership. SoftBank shares surged and Son's net worth hit $68 billion in 2000, almost surpassing Microsoft's Bill Gates as the world's richest man. Then the bubble burst and hundreds of his investments went under. His stock fell 99 per cent.

But among the wreckage, Son had some winners. He was an early backer of Yahoo! Inc and he bet on China's Alibaba Group Holding Ltd, which turned into one of the best venture bets of all time. He parlayed an initial $20 million investment into a stake that is now valued at more than $90 billion, or 4,500 times his original investment.

If Son was spooked by the crash, he never let it show. He continued to cut big deals, including the $22 billion acquisition of US wireless carrier Sprint Corp. Last year, he made the biggest deal of his career, buying chipmaker ARM Holdings for $32 billion. After the announcement, his stock got hammered as stunned investors fled.

Son responded with an impassioned pitch. He argued this is a rare moment in history when technology's rapid evolution provides opportunities that may never appear again.

''People think this was a stupid move, they've voted with their money,'' Son said at the time. ''It's easy to look at where your pieces are now and place the next one nearby. This one is 10, 20, 50 moves ahead.''