SoftBank Group has announced a partnership with Saudi Arabia to create what will rank among the world’s biggest tech fund, with a target of up to $100 billion.
SoftBank revealed on Friday that it is creating a new fund in partnership with Saudi Arabia and other interested investors to pump $100 billion into highly-promising technology companies across the world in the next five years. The fund is to be managed by a subsidiary of the Japanese telecoms company in the UK.
“With the establishment of the SoftBank Vision Fund, we will be able to step up investments in technology companies globally,” Masayoshi Son, founder and chairman of SoftBank, said. “Over the next decade, the SoftBank Vision Fund will be the biggest investor in the technology sector.”
Son, the second-richest man in Japan, has successfully built his company from a mere $50,000 startup to a $68 billion telecommunications heavyweight. The SoftBank Vision Fund represents his efforts to extend his investment into more areas as he seeks to become one of the most notable investors in the world.
SoftBank said Saudi Arabia will be the fund’s lead investment partner. The country’s leading sovereign wealth fund the Public Investment Fund (PIF) is expected to invest as much as $45 billion over the coming five years. The Japanese telecom firm will add at least $25 billion to the fund, while other unidentified large investors that have shown interest could raise the total pool up to $100 billion.
If the target pool is achieved, the SoftBank Vision Fund could become the largest in the world. Compare that to the record $129.5 billion investment which CB Insights reports that global venture capital funds made last year.
The Saudis have started shifting more focus into non-oil industries to drive local economy amid low prices in the global oil market. Deputy Crown Prince Mohammed bin Salman is at the forefront of the drive to boost the kingdom’s economy. Among the plans he has announced this year is the expansion of the PIF to around $2 trillion, significantly up from the previous $160 billion.
The Saudi government has become more aggressive in terms of its investments this year, shifting away from a tradition of making low-risk investments. It bought into the popular American ride-hailing company Uber in a $3.5 billion deal in June, signifying its intention to explore the global tech industry.
SoftBank has signaled its interest in becoming a major actor in the future-focused system of Internet of Things (IoT) with the acquisition of British chip maker ARM Holdings Plc for $32 billion in July. The firm’s portfolio already included investments in such companies as American carrier Sprint Corp, Chinese ecommerce giant Alibaba Group Holding Ltd., and Yahoo.
The 59-year-old Son, who had earlier made known his desire to retire in his 60s, brought in Nikesh Arora in 2014, grooming the ex-Google executive to become his successor. Fast forward to two years after, the SoftBank founder doesn’t look ready to retire any time soon.
The person who will head the new tech fund has not yet been revealed. The Japanese telecom company doesn’t want to give much information away yet, saying the Vision Fund had yet to close.