Tuesday 4 June 2019 4:15 pm

Softbank earns $11bn for selling some of its huge Alibaba stake

Japan’s Softbank will book a pre-tax profit of $11.1bn (£8.75bn) for selling part of its stake in Chinese ecommerce giant Alibaba.

The sale forms part of a three-year-old deal to sell assets in order to buy British chip designer ARM for $32bn in 2016.

Read more: Uber IPO: Shares slide on second day of trading

Softbank also sold stakes in gaming startups Supercell and Gungho Online to finance the purchase.

The transaction leaves Softbank with a 26 per cent stake in Alibaba worth $101bn.

Softbank said it would book the profit in the financial quarter ending June.

The group’s founder and chief executive Masayoshi Son bought the stake in Alibaba for just $20m in 2000.

The Chinese startup’s growth into one of the world’s biggest e-commerce companies has helped burnish Son’s tech investor credentials.

The announcement comes at a time where investors are worrying about Son’s strategy of borrowing heavily to finance acquisitions.

In the year ending March 2018, the company wrote down ¥425bn derivative loss and forecasted a reversal to ¥1.2 trillion profit by the settlement date this month.

Son has referred to the value of the Alibaba stake to argue that Softbank’s shares are undervalued.

Shares have fallen 23 per cent from their April high following the end of of a ¥600bn stock buyback programme in February and last month’s lacklustre IPO from Uber, one of Softbank’s biggest bets.

The Japanese technology giant is in the process of looking for investors for a second mega fund worth $100bn.

Alibaba is considering a second listing in Hong Kong after a record-breaking 2014 New York debut to raise as much as $20bn.

Read more: Softbank’s AI fund injects $15m into London startup

This may offer Son an opportunity to offload more shares.

The company’s shares closed down 3 per cent on Tuesday ahead of the Alibaba sale announcement. Softbank declined to comment.