SoftBank's bid to raise $6 billion margin loan backed by OpenAI stake stall: Report
Chief Executive Officer Masayoshi Son recently reiterated his bullish view on the technology, saying he expects the AI revolution to be significantly larger than the dot-com boom.
SoftBank Group's talks with potential creditors to raise at least $6 billion from a margin loan backed by its OpenAI stake have stalled, Bloomberg News reported on Wednesday, citing sources. The company is considering various fundraising options, the report said, adding that it could still move forward with the margin loan at a later stage.
The setback comes just weeks after the Japanese conglomerate reduced its initial target for the loan from $10 billion, amid lender concerns over OpenAI’s $852 billion valuation and the challenges of using shares in the privately held artificial intelligence company as collateral, the report said.
News of the stalled talks contributed to a sharp decline in SoftBank’s shares, which fell more than 8-9% in trading in Tokyo on Wednesday.
SoftBank, led by CEO Masayoshi Son, has been one of the most aggressive investors in the AI sector.
Chief Executive Officer Masayoshi Son recently reiterated his bullish view on the technology, saying he expects the AI revolution to be significantly larger than the dot-com boom.
The development arrives as SoftBank works to maintain its credit rating and fund continued AI-related ambitions without divesting core holdings.
OpenAI, the creator of ChatGPT, has seen explosive growth but continues to face scrutiny over its high valuation amid rapid industry expansion and competition.
Overall, the development highlights the gap between the lofty valuations achieved in private funding rounds for AI companies and the more conservative assessments made by banks and creditors when extending large loans.
Lenders have previously expressed hesitation about pricing unlisted shares like those in OpenAI, particularly given limited secondary market liquidity and downside protection considerations.
The setback comes just weeks after the Japanese conglomerate reduced its initial target for the loan from $10 billion, amid lender concerns over OpenAI’s $852 billion valuation and the challenges of using shares in the privately held artificial intelligence company as collateral, the report said.
SoftBank had reportedly secured commitments for around $5 billion prior to the latest developments, the report added.
News of the stalled talks contributed to a sharp decline in SoftBank’s shares, which fell more than 8-9% in trading in Tokyo on Wednesday.
SoftBank, led by CEO Masayoshi Son, has been one of the most aggressive investors in the AI sector.
Chief Executive Officer Masayoshi Son recently reiterated his bullish view on the technology, saying he expects the AI revolution to be significantly larger than the dot-com boom.
The development arrives as SoftBank works to maintain its credit rating and fund continued AI-related ambitions without divesting core holdings.
OpenAI, the creator of ChatGPT, has seen explosive growth but continues to face scrutiny over its high valuation amid rapid industry expansion and competition.
Overall, the development highlights the gap between the lofty valuations achieved in private funding rounds for AI companies and the more conservative assessments made by banks and creditors when extending large loans.
Lenders have previously expressed hesitation about pricing unlisted shares like those in OpenAI, particularly given limited secondary market liquidity and downside protection considerations.
(Edited by : Ajay Vaishnav)
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