Super returns for playing the (very) long game

Cast your mind back to 2000 and see if you can remember; the dot com bubble burst, the new Millennium, Nokia phones, teen pop music and fashion styles represented by “Mash-up”, but more importantly Softbank’s USD 20m investment into Alibaba.com Corporation, announced on January 18th 2000!

16 years, two global recessions, countless consumer trend and technological developments later and finally Softbank announce their intention to “monetise” some of their original investment in Alibaba. Yesterday saw an announcement by Softbank on behalf of their subsidiary, SB China Holdings, that they would be selling a 4.2 per cent stake in Alibaba, raising a staggering USD 7.9 billion. Alibaba has a market capitalisation of over USD 192bn, so Softbank's remaining holding still has significant value. So why sell now?

Softbank has stated that "it continues to be committed to its partnership with Alibaba." and added that "the deals are driven by its capital structure and de-leveraging objectives”. Add into the equation investor concerns and it may not be long before Softbank's stake is reduced again.

Filed under: Japan, M&A, dealmaking