Once Alibaba’s main investor, SoftBank sheds remaining stake

SoftBank, once Alibaba's biggest investor, has sold its stake in the Chinese tech company, it told investors on an earnings call.

On Monday, CFO Yoshimitsu Goto detailed that Alibaba had accounted for 48 percent of Softbank's assets in 2020, but now, this was "almost zero."

The Japanese investment holding firm initially invested $20 million into Alibaba back in 2000 when it was merely a startup. CEO Mayashi Son claimed to be smitten with Jack Ma and his charisma despite Ma's "wrong" business model.

At the time of Alibaba's IPO, Softbank owned 24 percent of the company. That reportedly slid to 7 percent in December 2022 and 0.5 percent in May of last year.

Goto explained that while Alibaba's stake had declined, Arm, which is reportedly preparing to add AI chips to its product portfolio starting in 2025, had shifted to account for more than 45 percent of Softbank's net asset value. Vision Funds accounts for 29 percent.

The CFO detailed the change was "not just simply shifting from Alibaba to someone else, rather it shows [a] shift to [an] AI centric portfolio."

Softbank's quarterly results for the period ending March 31, 2024 showed [PDF] its second consecutive quarterly profit – this time 231 billion yen ($1.48 billion). Comparatively, a year earlier it suffered a 57.6 billion yen ($370 million) quarterly loss.

Net losses narrowed for the fiscal year from 970.1 billion yen ($6.2 billion) to 227.6 billion yen ($1.45 billion).

For FY23, Softbank said it incurred 959.9 billion yen ($6.14 billion) realized and unrealized valuation losses on Alibaba shares that were offset by 1.51 trillion yen derivative gains ($9.7 billion) related to its prepaid forward contracts.

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While Softbank's strategy involves pulling itself further out of the red by ditching Alibaba and eyeing up AI infrastructure, it may be also putting more money into messaging apps.

South Korea's NAVER detailed last Friday that it is in talks with Softbank over the sale of A Holdings, the company that controls LY Corp – an entity that operates the popular Japanese messaging app LINE along with Yahoo! Japan.

LY Corporation was formed in 2021 after it acquired LINE from South Korean tech giant NAVER. NAVER and LINE have operated intermingled tech stacks since.

But in November of last year, a data leak highlighted the risks of such intermingled stacks and drew the attention of governments. The data of more than half a million users was exposed.

Japan's Ministry of Internal Affairs and Communications ordered a distentanglement, but has thus far been unsatisfied with proposals to do so.

Since then, things have become messy between the South Korean and Japanese governments as the former would prefer the latter kindly back off any pressure for a sale.

Workers belonging to NAVER's unions have opposed the sale of Naver LY stake to SoftBank, citing job security. ®