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SoftBank’s cheap valuation draws $1 billion bet from U.S. fund Tiger Global

Softbank

 

 

13th July 2018, India:

Softbank Group Corporation has received a stake worth over $1billion from U.S hedge fund Tiger Global. According to a source who is closely associated with the matter, the reason behind it is that the U.S hedge fund Tiger Global thinks the Japanese firm as undervalued. This has also driven the Softbank’s shares up to 6.8 per cent.

This decision is also the result of company’s purchase of U.S. investment group Fortress and the launch of its near-$100 billion Vision Fund to find and grow promising technology leaders.

Tiger Global and SoftBank have often invested in the same companies like Uber and India’s Ola. SoftBank also bought most of Tiger’s stake in Indian e-commerce firm Flipkart Group earlier this year.

“We continue to believe the market significantly undervalues our stock and we welcome the support from a sophisticated institutional investor like Tiger Global,” SoftBank said in an email to Reuters on Thursday.

Also, the bump added about $6 billion to SoftBank’s market capitalization, which narrowed the gap between the company’s limited valuation as a conglomerate and the valuation that the company says it deserves.

The Japanese tech and telecoms firm have started to take action to address the issue by preparing a list of its domestic telecoms unit. It holds nearly 30 per cent stake in Chinese e-commerce giant Alibaba. It hopes that it will clarify the distinction between its domestic telecoms operations and investing activities and help chip away at its discounted valuation.

New York-based Tiger Global told investors in a letter that SoftBank’s stock price has not increased over the last five years even though it’s holding in Alibaba has added more than $90 billion in value.

SoftBank shares which had risen up to 6.8 per cent, pushed up the company’s market value to about $91 billion.

The company’s charismatic CEO Masayoshi Son, who owns 21 percent of SoftBank, said at a shareholders’ meeting last month, that a “conglomerate discount” was weighing on the company’s stock and the stock should be trading above 14,000 yen rather than where they were then – at around 8,000 yen – to account for its investments.

Besides Alibaba, the company also has stakes in U.S. telecoms firm Sprint Corp and Yahoo Japan.

(Image – The Japan Times)

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