SoftBank’s debt obsession
techcrunch.com
SoftBank’s debt obsession
1–10 of 85 posts
Re: SoftBank’s debt obsession
#2I wonder how are the downside-protecting elements and that unusual debt based financing structure affecting Uber and other large companies that SoftBank invests in. Is it possible that Uber collapses because of the 7% yearly coupon that SoftBank fund must produce ?
Re: SoftBank’s debt obsession
#3I wonder how are the downside-protecting elements and that unusual debt based financing structure affecting Uber and other large companies that SoftBank invests in. Is it possible that Uber collapses because of the 7% yearly coupon that SoftBank fund must produce ?
There is no risk of SoftBank's financial situation causing a collapse at one of the companies in which they hold a minority stake. The worst that could happen is they don't fund Uber the next time they need funding.
Re: SoftBank’s debt obsession
#4I wonder how are the downside-protecting elements and that unusual debt based financing structure affecting Uber and other large companies that SoftBank invests in. Is it possible that Uber collapses because of the 7% yearly coupon that SoftBank fund must produce ?
There is no risk of SoftBank's financial situation causing a collapse at one of the companies in which they hold a minority stake. The worst that could happen is they don't fund Uber the next time they need funding.
That would depend on the term sheet, wouldn't it? 7% guaranteed yearly return may require unusual conditions on the investment side.
Re: SoftBank’s debt obsession
#5Earlier quoted context omitted.
There is no risk of SoftBank's financial situation causing a collapse at one of the companies in which they hold a minority stake. The worst that could happen is they don't fund Uber the next time they need funding.
That would depend on the term sheet, wouldn't it? 7% guaranteed yearly return may require unusual conditions on the investment side.
Sure, that's possible but then you're just dealing with relatively blind speculation. I would assume there's no issues on the investment side unless there's strong reason to believe there is.
Re: SoftBank’s debt obsession
#6Earlier quoted context omitted.
There is no risk of SoftBank's financial situation causing a collapse at one of the companies in which they hold a minority stake. The worst that could happen is they don't fund Uber the next time they need funding.
That would depend on the term sheet, wouldn't it? 7% guaranteed yearly return may require unusual conditions on the investment side.
My guess would be generous liquidation preference and possibility to force IPO or liquidation event.
Re: SoftBank’s debt obsession
#7// Oversimplified napkin math for fun, stop taking this seriously //
> Around 60% of the money promised to the Vision Fund by investors other than SoftBank takes the form of debtlike securities that earn a 7% fixed return annually.
They get $70B and have to pay 7% fixed annually. S&P rate of return on average is 9.7%. Softbank could pocket 2.7% of $70B ($1.89B a year) by just investing in an index. With $70B you could stay solvent longer than the market can remain irrational, so you're operating with very little risk. (Ignoring all the difficulties in investing that much, etc)
Maybe SoftBank likes debt because even if they have no where to invest they'd still make $2B/year.
EDIT: This isn't a serious comment, literally just throwing numbers in the air for fun. I know very little about investing.
Re: SoftBank’s debt obsession
#8Does anyone know if any of the term sheets for these $1 billion+ deals have ever been made public? I'm really curious what the ins and outs are.
Alternatively, any accurate data on what market terms are for these humongous rounds?
Re: SoftBank’s debt obsession
#9Note that Masayoshi Son has the distinction of losing the most money in history when he lost approximately $70 billion during the dotcom crash. He still has a net worth of $23 billion.
Win big. Lose big.
Re: SoftBank’s debt obsession
#10// Oversimplified napkin math for fun, stop taking this seriously // > Around 60% of the money promised to the Vision Fund by investors other than SoftBank takes the form of debtlike securities that earn a 7% fixed return annually. They get $70B and have to pay 7% fixed annually. S&P rate of return on average is 9.7%. Softbank could pocket 2.7% of $70B ($1.89B a year) by just investing in an index. With $70B you coul…
Good point. I think also debt’s effect is the perfect alignment for their “last” stage investing where risk and return are lower.