SoftBank to make 34 billion euros gain by reducing its stake in Alibaba

SoftBank to make 34 billion euros gain by reducing its stake in Alibaba

TOKYO (Reuters) – SoftBank said on Wednesday it would make an estimated 4.6 trillion yen (34.27 billion euros) gain on the settlement of prepaid futures contracts using Alibaba shares, reducing its stake in the Chinese giant from 23.7% to 14.6%.

On Monday, the Japanese bank posted a record quarterly net loss as the portfolio value of its investment fund Vision Fund fell. Its chief executive Masayoshi Son has pledged to further reduce investment activities and cut costs.

The estimated gain announced Wednesday includes 2.4 trillion yen from the revaluation of shares in the Chinese e-commerce giant and a derivative gain of 700 billion yen, SoftBank said in a filing.

This transaction “will be able to eliminate concerns about future cash outflows and, in addition, reduce the costs associated with these prepaid futures contracts,” SoftBank said.

It is not expected to result in further sales of Alibaba shares in the market as the shares were hedged when initially monetized, SoftBank said.

Masayoshi Son recently highlighted the decline in the share of Chinese “tech” in his portfolio, against the backdrop of increased repression led by Beijing against a range of industries, first and foremost the technology sector, and renewed tension between the China and the United States.

(Report Sam Nussey; French version Valentine Baldassari, edited by Kate Entringer)

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