Softbank Group To See Profits Worth $2.7 Billion From Its Stake Sale In Alibaba

Softbank Group announced a 359.6 billion yen ($2.7 billion) gain from the sale of a share in Alibaba Group Holdings to a wholly-owned subsidiary called Shiodome Project 17 GK on Thursday.

Alibaba's stock rose on Wednesday after the Chinese e-commerce giant said that it will split into six entities and consider financing or IPO for the majority of them, marking the largest restructuring in the company's 24-year history.

SoftBank said the transfer of 178.7 million Alibaba shares from the group holding company was to "improve management efficiency through the centralized management of these shares, in light of the potential to use them for financing in the future."

Masayoshi Son's Japanese investment group did not elaborate on the purpose of the proposed financing. SoftBank owns 13.7 percent of Alibaba.

SoftBank stated in a statement that the gain on the sale of investment securities included a gain of 117.1 billion yen relating to a previously postponed prepayment forward contract that was resolved in October 2022.

It made a $34 billion profit last year by selling its investment in Alibaba, as the company attempted to shore up its financial reserves following heavy losses at its Vision Fund business.

Son invested $20 million in Alibaba in 2000, and the Chinese firm's rise to become one of the world's largest e-commerce enterprises aided his credentials

But, Alibaba has lost more than two-thirds of its value since its peak in late 2020, owing to Beijing's crackdown on the digital sector, which includes a heavy punishment for Alibaba and an investigation into founder Jack Ma's business empire.

SoftBank shares fell 2% on Thursday before the news, trailing the 0.4 percent decrease in the overall market.