SoftBank to sell nearly all its stake in Alibaba – FT

The logo of Alibaba Group is seen at its office in Beijing, China. REUTERS/Thomas Peter/File photo

Japanese investment firm SoftBank Group Corp has moved to sell almost all of its remaining shares in China’s Alibaba Group Holding Ltd, the Financial Times reported citing regulatory filings it had analyzed.

Shares in Alibaba, one of the most valuable assets in SoftBank’s portfolio, tumbled as much as 5.1 percent in Hong Kong following the report before paring the loss to 3.3 percent. SoftBank shares traded unchanged, tracking a broader market.

The forward sales, which FT analyzed based on filings sent to the U.S. Securities and Exchange Commission, will eventually cut SoftBank’s stake in the e-commerce group to just 3.8 percent, the British newspaper reported on Wednesday.

SoftBank Corp’s logo is pictured at a news conference in Tokyo, Japan. REUTERS/Kim Kyung-Hoon/File photo

The Japanese group, led by billionaire founder Masayoshi Son, has sold about $7.2 billion worth of Alibaba shares this year through prepaid forward contracts, the newspaper said.

SoftBank has been seeking ways to monetize its stake in Alibaba, which the Japanese conglomerate bought  more than two decades ago with just $20 million spending.

SoftBank told FT the Alibaba transactions reflected its shift to “defensive mode” to address a more uncertain business environment, and said the company would provide details in its quarterly earnings results announcement in May.

Neither SoftBank nor Alibaba responded to Reuters’ requests for comment. Alibaba’s U.S.-listed shares dropped 1.3 percent in after-market trade.

SoftBank booked a gain of $34 billion last year by cutting its stake in Alibaba to 14.6 percent from 23.7 percent, as the firm sought to shore up its cash reserves amid steep losses incurred by its Vision Fund.

At the time, it also used prepaid forward contracts, a type of derivative contract that allows an investor to hedge risk associated with an equity investment in a company.

Alibaba has lost more than two-thirds of its value from highs touched in late 2020, hit by increased regulatory action in the technology sector that included a hefty fine on Alibaba and scrutiny of founder Jack Ma’s business empire.