Masayoshi Son, chairman and chief executive officer of SoftBank Group Corp., attends a symposium on generative artificial intelligence (AI) at the University of Tokyo in Tokyo, Japan, on Tuesday, July 4, 2023.
Kiyoshi Ota | Bloomberg | Getty Images
Investment firm Elliott Management has rebuilt its position in Japanese conglomerate SoftBank and is pushing the Masayoshi Son-led firm to begin a $15 billion share buyback, according to a person familiar with the matter.
SoftBank, the majority shareholder of chip design firm Arm, has made a name for itself through its Vision Funds but trades at a steep discount to its book value, or the value of its assets and investments.
The news, first reported by the Financial Times, sent SoftBank shares up as much as 6.3%.
Elliot has a roughly $2 billion economic interest in SoftBank, according to the person. SoftBank’s market capitalization is about ¥13.85 trillion, or $88 billion following the surge.
The engagement is being led by partner Nabeel Bhanji, who also led Elliott’s previous push at SoftBank, the person said, adding that Elliott has engaged with SoftBank leadership in the past few months.
Japan has become fertile ground for activist investors, as the country’s historic reputation for shareholder unfriendliness has given way to a government- and Tokyo Stock Exchange-driven push for governance reform. Elliott has campaigned at other iconic Japanese firms, most recently at Mitsubishi Fudosan, as well as at Toshiba and at Dai Nippon Printing.
SoftBank shares have surged in recent months largely off the back of its Arm investment. The Japanese conglomerate took the chip design firm public in 2023, netting gains that helped mitigate losses it took on other investments in its Vision Fund. Son has also pared back on the bets that made him and his firm famous.
Son’s most successful investment was a 2000 check to Alibaba for $20 million. It ended up being worth billions to SoftBank, which has since de-risked out of China and eliminated its Alibaba position.
Since that 2000 check, SoftBank’s Vision Funds made a series of high-dollar investments in companies that have gone bankrupt or sharply marked down their valuations. Most notably, Son cut a check to WeWork, which spiraled from a $47 billion valuation into bankruptcy last year. WeWork has since emerged from restructuring under new ownership, but SoftBank remains billions of dollars in the red on its investment.
Still, the success of Arm has gone a long way in tempering those losses. SoftBank’s Japanese shares trade at their highest level in decades. But Elliott sees an opportunity, bolstered by nationwide reforms and a tidal shift in Japanese thinking around shareholder engagement, to spur those shares even higher.
SoftBank launched a $20 billion share buyback and asset disposal program in 2020 during Elliott’s initial campaign. Elliott now believes another buyback program, this time for $15 billion, would increase SoftBank’s share price and act as a sign of confidence in Son’s plans for the company, according to the person, which includes a fresh push in the AI space.
SoftBank declined to comment.