SoftBank Plans to Sell Significant Portion of Alibaba Stake, Reports The FT
According to The Financial Times, SoftBank is apparently planning to sell a significant portion of its stake in Alibaba as it continues to work on reshaping its business strategy. The potential move could allow SoftBank the ability to gain cash to pay down debt and acquire other companies.
The Potential Sale
SoftBank holds a total of 26% of China’s largest e-commerce company, which is worth about $150bn. The sale could see around half of those shares sold to offset some losses. SoftBank’s move comes after the Japanese firm announced plans to raise up to JPY 4.5tn ($41bn) through asset sales, the biggest being the sale of T-Mobile US.
Why SoftBank is Selling its Stake in Alibaba?
By selling Alibaba’s shares, SoftBank would raise capital to pay down debts, about $11.5 billion in loans, some of which were incurred from the investment in WeWork. SoftBank is moving away from the retail space to focus on the technology sector where it anticipates higher growth returns.
The Possible Effects of the Sale on Alibaba
Should SoftBank go ahead with the sale, it may result in Alibaba shares falling in the near term. However, the Chinese market is known to have a big impact on the company’s price in the short term while, in the long term, Alibaba is bound to grow as SoftBank and others believe, and has a solid track record of progress in the market.
The potential sale of a large portion of SoftBank’s stake in Alibaba could have an impact on the future of the Japanese firm. The move is part of SoftBank’s restructuring strategy, which is focused on cutting down debts and acquiring new businesses to drive growth. The decision to sell its Alibaba shares indicates a renewed focus on technology investments.
SoftBank is reportedly planning to sell a large portion of its 26% stake in China’s Shopify sound-alike, Alibaba. According to sources, the company is aiming to raise cash to pay down its $11.5 billion debt and to acquire other technology businesses. Furthermore, this move is in line with SoftBank’s strategy of cutting down its debts and focusing solely on technology investments. With this move, SoftBank is likely to leave the Chinese market, and shareholders in Alibaba should prepare for a potential drop in the company’s short-term value.
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