SoftBank plans to raise ¥120 billion (about $809 million) in a public offering of a bond-type class of shares. The Japanese firm plans to sell 30 million shares—targeting individuals as well some institutional investors—at ¥4,000 per share, by the end of the 2024 fiscal year.
Incorporating equity and debt financing, this class of shares—issued to balance growth investment with a high level of shareholder returns while making growth investments in advanced telecoms, IT technologies and next-gen social infrastructure—was offered in a regulatory filing on Sept. 25. The issuance of this kind of bond-type shares is a first in Japan.
The shares cannot be converted into common shares later—nor do they confer voting rights. Rather, they are designed to minimize the impact on existing holders of common shares, while also being a useful financing option to increase equity capital.
The hybrid shares—“recorded as equity for accounting purposes”—provide a set dividend and can be redeemed for cash by SoftBank after five years. At that point, the company can redeem them at an amount equal or greater in value than the issuance price, the company added. In other words, the securities are like callable bonds. The company notes that the annual dividend is set at between 2.5% to 3%.
SoftBank, the telecoms arm of the SoftBank Group, first made the announcement in March, pending board approval. The shares were listed on the Prime Market of Tokyo Stock Exchange, making it available for investment by retail investors, on November 2nd.
SoftBank’s announcement comes at a topsy-turvy time for the firm. At its lowest point, both SoftBank and the SoftBank Vision Fund, a $100 billion fund launched by the SoftBank Group, invested heavily in real estate startup WeWork, which filed for bankruptcy in November. That venture cost both companies around $11.5 billion in equity losses, with another $2.2 billion in debt still up for grabs.
The Vision Fund has also been the subject of a recent regulatory probe. The co-founders of social media app IRL allege in a lawsuit that SoftBank unfairly shut it down, despite touting its valuation at $1 billion. In total, Vision Fund investments lost some $32 billion in 2022.