Softbank, the biggest shareholder of Alibaba Group Holding, has completed its first sale of Alibaba stocks in a USD11.1 billion deal done via its unit, benefiting on the rise of the Chinese tech giant’s equity price during the past three years.
Softbank will earn USD11.1 billion pre-tax from its variable forward contract regarding 2.8 percent of Alibaba’s stocks, the Tokyo-based firm said in a statement yesterday. Variable prepaid forward contracts allow investors to hedge against risks, increase their short-term liquidity, and avoid taxes. Softbank will still hold 26 percent of Alibaba’s shares after the transaction.
WRH, a unit of the Japanese firm, and Mandatory Exchangeable Trust penned the deal in June 2016 regarding a total offering size worth USD6.6 billion. The share price of Alibaba [NYSE: BABA] hovered around USD77 in June 2016 while it has risen to USD154.20 at yesterday’s close, with a market value of USD388.6 billion.
Softbank inked the deal to secure funds to buy British chip company ARM Holdings and set up its Vision Fund, the firm said in a statement. Vision Fund is known for backing startups such as Uber and WeWork.
Masayoshi Son, founder and chief executive of Softbank, spent USD20 million to buy the Hangzhou-headquartered tech firm’s shares in 2000, joining the board of directors. He topped up his investment by USD60 million in 2004.
Source: yicaiglobal.com
