SoftBank restarted talks with major banks, but valuation hurdles persist. The outcome could reshape financing options for private AI stakes.<\/p>\n
On July 1, SoftBank Group renewed talks with a consortium of lenders regarding a $10 billion loan secured by its stake in OpenAI, after earlier attempts to raise financing stalled due to difficulties valuing private companies, sources familiar with the matter said.<\/p>\n
Loan terms and participants<\/p>\n
To boost lenders\u2019 confidence, SoftBank is offering to guarantee repayment of the loan by giving banks the right to call on the company if the value of the shares serving as collateral for the loan falls.<\/p>\n
Sources said the consortium is expected to include Goldman Sachs, JPMorgan Chase, and Mizuho Financial Group.<\/p>\n
SoftBank and OpenAI did not respond to requests for comment, and representatives of these financial groups declined to comment.<\/p>\n
The financing is part of SoftBank\u2019s strategy to support investments in artificial intelligence. This instrument is called a margin loan and it operates similarly to a line of credit.<\/p>\n
Material changes in structure and risks<\/p>\n
Initially SoftBank asked for the loan to be secured exclusively by its stake in OpenAI, but banks pushed back against such a scheme, since if the collateral\u2019s value declined, SoftBank would have no other rights to recover the debt.<\/p>\n
This case highlights lenders\u2019 caution toward loans secured by stakes in private companies, where valuation and the ability to sell are more challenging than for shares in publicly traded companies.<\/p>\n
It was not possible to determine definitively whether lenders have additional concerns about OpenAI\u2019s valuation. Valuations of leading AI companies have risen in recent years amid competition for leadership in the AI field.<\/p>\n
Context and outlook<\/p>\n
SoftBank has become one of the world\u2019s largest backers of OpenAI during Masayoshi Son\u2019s leadership and has spent more than $60 billion on OpenAI and related infrastructure projects, including Stargate, announced last year in a joint venture with OpenAI and Oracle.<\/p>\n
The company widely uses debt- and asset-backed financing tools to support its investments in AI. In recent months SoftBank has considered several financing options tied to its asset portfolio. Earlier, it planned to raise a $5 billion margin loan secured by Arm Holdings\u2019 shares, whose stock has risen amid interest in artificial intelligence.<\/p>\n
Unlike OpenAI, the Arm loan was secured by shares of a public company, which simplified their valuation and potential sale if needed. Earlier SoftBank sought to raise no less than $10 billion through a margin loan secured by OpenAI; later the amount was reduced to about $6 billion due to a lack of significant interest from lenders, reports said earlier.<\/p>\n
OpenAI was also weighing a possible entry into the U.S. stock market via a confidential filing in June, which could later facilitate valuation of SoftBank\u2019s stake and its potential exit.<\/p>\n
There is also a maturity date in March 2027 for a $40 billion bridge loan that supported the investment in OpenAI. SoftBank said that repayment would likely be funded from existing assets and other financial measures.<\/p>\n
Son continues to ramp up SoftBank\u2019s spending in AI, investing in data centers, chips, and robotics, in an effort to bolster the conglomerate\u2019s position in the rapidly growing field.<\/p>\n","protected":false},"excerpt":{"rendered":"SoftBank restarted talks with major banks, but valuation hurdles persist. The outcome could reshape financing options for private…\n","protected":false},"author":2,"featured_media":92573,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[1296,2040,10494,66,157,25390,48574,48573],"class_list":["post-92572","post","type-post","status-publish","format-standard","has-post-thumbnail","category-openai","tag-goldman-sachs","tag-jpmorgan","tag-margin-loan","tag-news","tag-openai","tag-private-company-valuation","tag-softbank-openai-loan","tag-softbank-openai-loan-margin-loan-private-company-valuation-goldman-sachs-jpmorgan"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/92572","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/comments?post=92572"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/92572\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media\/92573"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media?parent=92572"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/categories?post=92572"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/tags?post=92572"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}