SoftBank Group Corp to divest 4.2% stake in Alibaba Stake to pay down debt

1 Jun 2016

Japanese telecoms giant SoftBank Group Corp is to sell off a 4.2% stake in its Chinese e-commerce business Alibaba Group, generating around USD8 billion which will be used to pay down the telco’s debt. The share valuation values the entire Alibaba Group at around USD190 billion; upon completion of the sale, SoftBank will remain the Chinese company’s biggest single shareholder with a 28% stake worth approximately USD53 billion. The Japanese communications firm invested just USD20 million in the venture in 2000, and its founder and CEO Masayoshi Son has generated a sizeable return on his initial investment in the intervening years. It is understood that SoftBank Group Corp will sell at least some of the shares to Alibaba itself, as well as to an unnamed sovereign wealth fund and US institutional investors.

Earlier, SoftBank Group Corp had reported a 29% drop in annual profit for the year to 31 March 2016, down to JPY474.2 billion (USD4.36 billion), adversely impacted by ongoing issues surrounding efforts to turn round struggling US mobile subsidiary Sprint Corp. Further, the Tokyo-headquartered company reported that profits in the fourth quarter of its fiscal year plunged 49% to JPY45.2 billion, even though it claims to have seen some recent signs of a turnaround at the US business. More positively, SoftBank booked consolidated net sales of over JPY9.2 trillion – up 8% on an annualised basis – as Sprint Corp improved sales by 2% y-o-y (to JPY3.9 trillion) and the group’s domestic activities contributed a further JPY3.1 trillion (up 4%). Adjusted EBITDA of JPY2.4 trillion marked a significant improvement of 19% y-o-y, and EBIT climbed 9% to JPY999.5 billion despite an 8% dip in income at Sprint to JPY61.5 billion.

Japan, SoftBank Group Corp