New York activist fund Elliott Management, which specializes in taking stakes in distressed companies, has acquired a $ 2.5 billion stake in SoftBank according to the Wall Street Journal, or nearly 3% of the capital of the Japanese group. Founded in 1977 by billionaire Paul Singer, Elliott Management wants to interfere in SoftBank’s strategy by calling for more transparency and better management of decisions concerning the technology fund Vision Fund. The activist fund also proposes to launch a share buyback program to reduce the gap between the group’s value and its various holdings.
In fact, SoftBank’s market capitalization is well below its holdings. In addition, the Japanese group’s strategy concerning WeWork is still talking about it since SoftBank announced last November a loss of 6.5 billion dollars, in particular due to its investment in WeWork, that is to say the most important quarterly loss of its history. After the financial scandal surrounding the co-working startup, SoftBank became the majority shareholder of WeWork following the decision of its founder, Masoyoshi Son.
Vision Fund, a major challenge
Elliott Management is therefore asking to rethink the strategy around the Vision Fund, which generally relies on companies that are already well supported in venture capital. With $ 100 billion, the fund has invested in Slack, Uber, Flipkart and Guardant Health in particular and represents an important stake. SoftBank also announced in 2019 its intention to launch a second technology investment fund that it ultimately had to finance itself, since investors did not follow.
Elliott Management is also facing difficulties, risking a fine of 20 million euros for not having complied with stock market regulations by buying 9% of Norbert Dentressangle’s capital in 2015.