Key Takeaways
- • SoftBank founder Masayoshi Son is seeking to raise up to $100 billion from Gulf investors for a new AI-focused venture fund that would acquire companies and use AI and other advanced technologies to transform their operations, according to the Financial Times as cited by Bloomberg.
- • SoftBank's first $100 billion Vision Fund, launched in 2017 with backing from Saudi Arabia's Public Investment Fund and UAE's Mubadala, has generated $26.6 billion in paper gains through the end of June, a modest return for almost a decade of investing.
- • Public exit routes are narrowing: OpenAI, in which Son has invested $65 billion, will not list this year, and SB Energy's public debut has been delayed as investors balked at the $50 billion valuation its bankers sought.
- • SoftBank is paying record yields on its junk bonds and has agreed to guarantee a $10 billion margin loan backed by OpenAI shares, signaling stretched financing capacity as global bond yields rise.
- • Ray Dalio warned the AI bubble was nearing a bursting point, and Michael Burry accelerated his bearish timeline, lending weight to the view that the AI investment cycle is entering late stages.
Summary
SoftBank Group founder Masayoshi Son is looking to raise up to $100 billion from investors in the Gulf for a new fund that would acquire companies and apply AI and other advanced technologies to transform their operations, according to the Financial Times as reported by Bloomberg. The proposed raise comes as skeptics of the AI investment boom grow more vocal. Billionaire Ray Dalio warned last week that the bubble was nearing its bursting point, and Michael Burry, of The Big Short, brought forward the timeline for his bearish thesis.
The pitch faces a difficult reception. Gulf investors are familiar with the track record of SoftBank's first $100 billion Vision Fund, set up in 2017 with major backing from Saudi Arabia's Public Investment Fund and UAE's Mubadala. That fund suffered high-profile setbacks, including WeWork's botched 2019 listing and the 2021 collapse of trade financing startup Greensill. Through the end of June, it had generated $26.6 billion in paper gains since inception, a modest result for nearly a decade of investing.
Bloomberg argues that Son's need to return to the Middle East underscores broader strain at SoftBank, even as it remains among AI's most committed backers. Public markets are no longer willing to accept sky-high valuations. OpenAI, into which Son has poured $65 billion, will not list this year, and SB Energy Corp., which is pursuing what would be the world's largest data-center project in Ohio, has delayed its public debut after investors resisted the $50 billion valuation its bankers sought. Financing conditions have also tightened as global bond yields rise. SoftBank is paying record yields on its junk bonds and has agreed to guarantee a $10 billion margin loan backed by OpenAI shares, a notable concession given the debt is already collateralized.
Bloomberg's commentary suggests Middle Eastern investors may be drawn less by confidence than by the prospect of acquiring SoftBank's existing AI gains at an attractive price, a special-situations trade rather than a broad endorsement of the next wave of AI spending. Dalio, speaking at the Forbes Global CEO conference in Singapore, noted that paper wealth must be sold to become cash, and that 'the bubble usually pricks.' Bloomberg concludes that Son's increasingly difficult search for fresh capital may signal that the AI investment cycle is entering its late stages.
The pitch faces a difficult reception. Gulf investors are familiar with the track record of SoftBank's first $100 billion Vision Fund, set up in 2017 with major backing from Saudi Arabia's Public Investment Fund and UAE's Mubadala. That fund suffered high-profile setbacks, including WeWork's botched 2019 listing and the 2021 collapse of trade financing startup Greensill. Through the end of June, it had generated $26.6 billion in paper gains since inception, a modest result for nearly a decade of investing.
Bloomberg argues that Son's need to return to the Middle East underscores broader strain at SoftBank, even as it remains among AI's most committed backers. Public markets are no longer willing to accept sky-high valuations. OpenAI, into which Son has poured $65 billion, will not list this year, and SB Energy Corp., which is pursuing what would be the world's largest data-center project in Ohio, has delayed its public debut after investors resisted the $50 billion valuation its bankers sought. Financing conditions have also tightened as global bond yields rise. SoftBank is paying record yields on its junk bonds and has agreed to guarantee a $10 billion margin loan backed by OpenAI shares, a notable concession given the debt is already collateralized.
Bloomberg's commentary suggests Middle Eastern investors may be drawn less by confidence than by the prospect of acquiring SoftBank's existing AI gains at an attractive price, a special-situations trade rather than a broad endorsement of the next wave of AI spending. Dalio, speaking at the Forbes Global CEO conference in Singapore, noted that paper wealth must be sold to become cash, and that 'the bubble usually pricks.' Bloomberg concludes that Son's increasingly difficult search for fresh capital may signal that the AI investment cycle is entering its late stages.
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