Links with the Saudi prince weigh on the future of SoftBank Fund & # 039; s
Links with the Saudi prince weigh on the future of SoftBank Fund & # 039; s
TOKYO, Japan's billionaire technology investor Masayoshi Son, earlier this year, called the crown prince of Saudi Arabia "a great person and a great investor."
The admiration is mutual. Crown Prince Mohammed bin Salman has pledged $ 45 billion of Saudi money for the $ 92 billion SoftBank Vision Fund from Mr. Son, which helps fund billions of dollars investments in new companies as a provider of WeWork Cos office space.
Now, the trade association of the two men threatens to tarnish the reputation of the Vision Fund and limits its future in the wake of accusations by Turkish officials that Saudi agents killed and dismembered Saudi journalist Jamal Khashoggi. Turkish officials say they believe the Crown Prince could have ordered the coup, which Saudi Arabia denies.
In the two weeks after Mr. Khashoggi's disappearance, Mr. Son still has to say a word publicly about the case.
As protests grow over the disappearance of Mr. Khashoggi, prominent speakers are withdrawing from a conference scheduled for next week in Saudi Arabia known as "Davos in the desert." Among them is Dara Khosrowshahi, the executive leader of Uber Technologies Inc., whose largest shareholder is SoftBank, and Kai-Fu Lee, CEO of Sinovation Ventures.
Turkish officials believe that journalist Jamal Khashoggi was killed at the Saudi Arabian consulate. Gerald F. Seib of the WSJ explains how Iran and Turkey could benefit from this tragedy. Photo: AP
Mr. Son has been included as speaker at the event. Mr. Son
SoftBank Group
Corp.
9984 -1.36%
He refused to say if he would. At a technology conference in San Jose, California, SoftBank Group Operations Director Marcelo Claure said the company is "looking anxiously at what is happening" in Saudi Arabia.
The Saudi issue contributed to SoftBank's shares receiving their greatest success in almost two years on Monday; The action was recovered later in the week.
The Saudi investment in Vision Fund was a classic move for Mr. Son, who said he likes to go with his instinct and base his decisions on a personal relationship.
When the businessman and the prince met for the first time in September 2016 at the Akasaka State Guest House in Tokyo, Mr. Son had been trying to raise money for what would later become the Trust Fund. View. The sovereign wealth funds in Singapore and China, as well as an investment arm of Japan's huge postal savings bank, were opposed, say the people involved in the discussions, and some potential investors are worried about the lack of precedents for a fund. So big that it depends on a single man, my son.
The Tokyo meeting lasted 45 minutes; every man was delighted. Mr. Son later said he had promised prosperity to the Saudis and told them that the Vision Fund would position the kingdom as an actor in the most important technological trends of the future.
Last year, at Davos in the Desert, Mr. Son said he had met many world leaders, but never someone like Prince Mohammed, "with great passion, youth, great vision and a little money". That also helps, "he said. "This is a fantastic combination."
Speaking to The Wall Street Journal in May, Mr. Son was still effusive. "He has the mentality and vision of an entrepreneur," Son said about the prince. "He is a great person and a great investor." He added that the two had been in contact "every day" since their first meeting.
Mr. Son's ability to detect a successful entrepreneur has served him well, with SoftBank's investment successes as
Alibaba Holding Group
Limited.
and the founder Jack Ma overcoming his mistakes. But while Mr. Son can cut employers who fail with relative ease, it is not so easy to break with the people who finance their bets, in this case, the Fund of Investment of the Saudi Arabian Fund.
Attracting an investor to a fund is like bringing someone to your family, and due diligence is critical, said Frank Packard, president of the Triple A Partners Japan Co. financial firm, which helps private funds raise funds in Japan. .
"You are putting your names together," said Packard. "Is it, would you want someone like a father-in-law?"
After the Vision Fund launched in May 2017, SoftBank was still vetoing the Saudis. At the end of 2017, SoftBank officials hired political analysts and experts from the Middle East to assess the risks of working with the Saudi government, say the people involved in the studies. One person said that the perceived risks included that the sovereign wealth fund would not deliver its money when necessary for new investments.
Mr. Son has misread political signals in the past. Justified the acquisition of the US telecommunications company. UU For US $ 20,000 million from SoftBank.
Sprint
Corp.
In 2013, in part with its belief that US regulators would approve a merger between Sprint and
T-Mobile US
Inc.
But the Obama administration said it would block the deal, and Sprint's debt weighed on SoftBank for years. Sprint and T-Mobile now hope to obtain approval for the merger of the Trump administration.
It is not clear what effect the disappearance of Khashoggi could have in any effort to launch a second Vision Fund. Mr. Son has said he is canvassing potential investors for a Vision Fund 2, also around $ 100 billion, and eventually wants to get Vision Funds 3 and 4.
Mr. Claure, the head of operations at SoftBank, said: "There is no certainty" that SoftBank will start another Vision Fund, and no dates have been set.
Prince Mohammed told Bloomberg this month that without Saudi Arabia's sovereign wealth fund, "there will not be a SoftBank Vision Fund." The Prince said he was ready to put another $ 45 billion in the Vision Fund 2.
-Phred Dvorak contributed to this article.
Write to Mayumi Negishi in mayumi.negishi@wsj.com
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