SoftBank plots $108 bln Vision Fund successor

SoftBank Group is planning to launch a $108 billion successor to its Vision Fund.

The Japanese tech giant has received memorandums of understanding from such institutions as AppleMicrosoft and Dai-ichi Life Insurance Company, according to a Softbank statement.

Investors will also include Mizuho BankSumitomo Mitsui Banking Corporation and Daiwa Securities Group, as well as the National Investment Corporation of National Bank of KazakhstanStandard Chartered Bank and “major participants” from Taiwan.

SoftBank intends to commit $38 billion to the fund.

SoftBank said it was still talking to potential investors and that it expects the fund’s anticipated capital to grow.

Goldman Sachs has been tapped to raise the vehicle, which is expected to close by March, Bloomberg reported in June.

“The objective of the fund is to facilitate the continued acceleration of the AI revolution through investment in market-leading, tech-enabled growth companies,” the statement noted.

Saudi Arabia’s Public Investment Fund, which was not named among the investors, is in talks with SoftBank, according to the UAE’s The National. The PIF formed a cornerstone of SoftBank’s debut near $100 billion Vision Fund. But the relationship between PIF and the SoftBank fund was called into question earlier this year after Saudi security personnel were accused of murdering the U.S. journalist Jamal Khashoggi, who was critical of the Saudi state.

In March, CEO Masayoshi Son noted the “good relationship between the PIF and the fund’s management” adding it was too early to say whether they would commit to Fund 2.

“When it comes to [the] next fund… with what kind of term we go in to raise money, it’s still too early to discuss,” Son said. “There are terms to be discussed, conditions to be discussed… that’s how I see the situation.”

The $97 billion first Vision Fund has raised concerns among industry professionals around competition for deals resulting in higher-priced assets, as it snaps up the hottest next-generation of innovation companies from China to Silicon Valley. More than half of the capital had been invested across 49 investments globally as of Dec. 31.

Its portfolio includes messaging app Slack, ride-hailing giant Uber and shared workspace provider We Company, (formerly known as WeWork).

Vision Fund generated a 45 percent net equity internal rate of return and a 29 percent net blended IRR as of March, according to SoftBank’s latest earnings.

Fund 2 follows the recent launch of SoftBank Ventures Asia Corp, a 317 billion won ($268 million; €240 million) South Korean-domiciled early stage vehicle. Investors include Korea’s National Pension Service and SoftBank Korea Corp.

This story first appeared in Private Equity International, an affiliate publication. PEI reporter Alex Lynn can be reached at Carmela Mendoza and VCJ contributed to this report.