Japan’s SoftBank is best known for placing large long term bets in businesses that it believes in and over the years; the company has been able to become one of the biggest in the world through that well-worn approach. In a new development, the Japanese financial giant has decided to raise its stake in the Japanese internet giant Yahoo Japan Corp. The investment involved in the whole venture is going to be $4.2 billion, but that is not all. Once SoftBank manages to raise its stakes, it is going to spin off Yahoo Japan into a subsidiary of its own, and the bank believes that this will significantly boost their profit margins. The bank believes that profit margins will be padded by as much as 24% in 2019 if they can create the new subsidiary.
Currently, SoftBank has a stake of 12% in Yahoo Japan but the internet company is going to issue more shares, and the bank now wishes to pump in $4.2 billion in the company. Once the deal goes through, SoftBank will have a stake of 45% in the company. While Yahoo is no longer a big name among internet companies at a global level, Yahoo Japan remains a dominant player in the country in key areas like e-commerce and news, which is why the acquisition could prove to be a hugely lucrative one for SoftBank.
SoftBank went public last year in one of the biggest initial public offerings in Japan in recent years, and this acquisition is going to be a huge strategic one for the Japanese giant. It is important to remember that SoftBank’s telecommunications arm has a slew of joint ventures with Yahoo Japan. Once that deal is finalized, it would also result in much greater control over those joint ventures. Some of the ventures include PayPay, which is a payment venture. Ken Miyauchi, the Chief Executive of Soft Bank, said as much. He said,
“The closer relationship will help drive growth at shared ventures such as QR code payment app PayPay.”
Last but not least, 2019 is a critical year for SoftBank as its venture fund, the Vision Fund is going to see two of its biggest investments in Uber and WeWork go public. Uber is going to go public this week, and the bumper IPO could see the fund’s total valuation rise to new levels.
