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SoftBank to sell Alibaba shares, raise $7.9 billion

But will continue to be the largest shareholder of the ecommerce giant June 3, 2016: Japan’s SoftBank announced that it will sell at least $7.9 billion in shares of China-based ecommerce giant Alibaba to raise capital. Softbank is Alibaba’s largest shareholder. It owns about 32 percent of the shares. The transactions will bring the figure down to 28 percent. The deal is said to boost...

But will continue to be the largest shareholder of the ecommerce giant

June 3, 2016: Japan’s SoftBank announced that it will sell at least $7.9 billion in shares of China-based ecommerce giant Alibaba to raise capital. Softbank is Alibaba’s largest shareholder. It owns about 32 percent of the shares. The transactions will bring the figure down to 28 percent. The deal is said to boost liquidity and improve leverage ratio of SoftBank.

The largest chunk will come with the issuance of $5 billion in mandatory exchangeable trust securities convertible into Alibaba shares in three years. SoftBank also plans to sell $2 billion in shares to Alibaba, $400 million to the Alibaba Partnership and $500 million to an unnamed sovereign wealth fund.

The move comes amidst the Japanese telecom company’s efforts to cut costs and focus on turning around Sprint, the American cellphone service provider that it controls. Under president Nikesh Arora, SoftBank aims to cut its debt. The company reported holding about just under $77 billion worth of long-term debt as of March 31, 2016, according to Standard & Poor’s Capital IQ, a research service.

SoftBank invested when Alibaba was just a year old. Not surprisingly, Alibaba is one of the most valuable assets in SoftBank’s portfolio.

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