SoftBank in Talks to Acquire Vision Fund Owned Stake of Arm

In accordance with people familiar with the situation, Vision Fund 1, a $100 billion investment fund that SoftBank Group Corp. raised in 2017, is in talks to sell it its 25% stake in Arm Ltd. This could be good news for investors who have been waiting years for a strong return.

The conversations take place as SoftBank, which presently owns 75% of Arm, is getting ready to list the chip designer on Nasdaq next month at a valuation of $60 billion to $70 billion.

If the negotiations lead to a deal, the Japanese tech investor would be delivering a major, immediate windfall to VF1 investors, including Saudi Arabia's Public Investment Fund and Abu Dhabi's Mubadala. They nursed losses after many of SoftBank's bets on startups such as workspace provider WeWork Inc and ride-sharing firm Didi Global soured.

The alternative - letting VF1 sell its Arm shares in the stock market over time following the initial public offering (IPO) - would typically take at least one to two years given the size of the stake. It would also be more risky for the fund's investors since it is possible that Arm's shares could drop following the IPO.

Thanks to investors' enthusiasm for artificial intelligence increasing the value of some of the startups it invested in, VF1 achieved profitability in the most recent quarter. Though $56 billion of the Vision Fund 2 (VF2)'s capital came from the Japanese company and its management, including Chief Executive Masayoshi Son, SoftBank was unable to find outside investors due to its prior losses.

Although SoftBank currently has no plans to do so, the sources claim that a sizable windfall for VF1 investors could increase SoftBank's chances of later turning to them for funding.