Softbank’s balance sheet has been bolstered following the pricing of Chinese e-commerce giant Alibaba’s IPO on the New York Stock Exchange. The Japanese telecoms group now holds 32.4% of Alibaba’s stock. The shares priced at US$68 each, giving the…
Softbank’s balance sheet has been bolstered following the pricing of Chinese e-commerce giant Alibaba’s IPO on the New York Stock Exchange.
The Japanese telecoms group now holds 32.4% of Alibaba’s stock. The shares priced at US$68 each, giving the company a market capitalisation of US$168bn and valuing Softbank’s stake at US$54bn.
Softbank’s CEO Masayoshi Son, who has become Japan’s richest man following the IPO, bought into Alibaba for US$20m in 2000.
Alibaba is selling 320 million shares, equivalent to a 13% stake, to raise US$21.8bn, making it the largest flotation in US history. The IPO could surpass the world record, set by China’s Agricultural Bank in 2010, if Alibaba’s underwriters exercise their option to sell a further 45 million shares, which would take the total raised to US$24.8bn.
Softbank’s share price has risen more than 17% since the start of September as anticipation built around the Alibaba listing. Although Son has said the company wants to keep at least 30% of the e-commerce group, it gives Softbank more options.
The success of the listing is a boost for the Japanese group, which shelved plans to merge its US mobile operator Sprint Corp with rival T-Mobile US last month due to regulatory concerns.
A Japanese report at the beginning of the month quoted an anonymous Softbank executive as saying that they “wouldn’t be surprised if our [Masayoshi Son] acquired Vodafone, since we are no strangers to each other”. Son has done business with Vodafone before, when Softbank acquired the telco’s Japanese business in 2006 for US$15bn.
Another option for Son could be Mexico. America Movil is reported to have contacted Softbank as it prepares to sell assets along the east coast of the country valued at more than US$17bn to reduce its market position in light of Mexico’s antitrust reforms.
Were Son to pursue that option there may be competition from US incumbent AT&T, which is “intrigued” by Mexico and Latin America in general, according to its chief strategy officer John Stankey. AT&T is also finalising the acquisition of DTH operator DirecTV, which has a stake in satellite TV provider Sky Mexico.
Softbank may also choose to bide its time and have another run at US consolidation in 2016 when a new administration will be installed which may adopt a warmer position towards in-market consolidation.
