Japanese investment giant SoftBank said it would book a $34.1bn gain by cutting its stake in Alibaba today as it looks to shore up its balance book after a bruising first half of the year.
The firm’s tech-heavy portfolio has been hit by nearly $50bn losses after a turbulent six months on global markets and is now accelerating sales to bolster its cash reserves.
It said this morning it will reduce its stake in Alibaba to 14.6 per cent from 23.7 per cent by settling prepaid forward contracts. By settling the Alibaba share contracts, SoftBank “will be able to eliminate concerns about future cash outflows, and furthermore, reduce costs associated with these prepaid forward contracts,” it said in a filing.
“These will further strengthen our defence against the severe market environment,” the firm said.
SoftBank chief Masayoshi Son bought into Alibaba for $20m in 2000 and the Chinese firm has since swelled into one of the world’s biggest e-commerce companies.
It has shed more than two-thirds of its value since the late 2020 highs however amid a major political crackdown on the tech sector in China and heightened scrutiny of founder Jack Ma’s business empire.
Ties between the two firms have reportedly weakened in recent years with both Son and Ma stepping dwon from board positions on each others’ firms in 2020.