SoftBank arm to invest $5 bn to resist tech giants
THE COMPANY’S INTERNET BIZ YAHOO JAPAN IS MERGED WITH A CHAT OPERATOR
TOKYO: SoftBank’s internet subsidiary Z Holdings outlined plans on Monday to invest 500 billion yen ($4.7 billion) in technology over five years to resist an onslaught from larger overseas rivals.
The announcement follows the merger of its internet business Yahoo Japan with chat app operator Line, creating a $30 billion domestic internet heavyweight.
Z Holdings said it is targeting sales of 2 trillion yen and operating income of 225 billion yen in three years, as the Covid-19 pandemic boosts demand for online services.
Following a complex transaction, two thirds of Z Holdings shares will be owned by a new holding company, A Holdings, owned 50:50 by SoftBank Corp and South Korea’s Naver Corp.
Z Holdings remains a consolidated subsidiary of SoftBank. Naver was the previous majority owner of Line.
The chief executive officers of Z Holdings and Line, Kentaro Kawabe and Takeshi Idezawa respectively, become co-CEOs of the combined
entity, reflecting the hybrid origin of the firm which straddles e-commerce, payments, advertising and chat.
Kawabe pointed to the breadth of those services, many of which are deeply embedded in the lives of Japanese consumers, as its defence against rivals like Google parent Alphabet and Amazon.com and their larger research budgets.
In an early indicator of
efforts to save on costs, Z Holdings said it was looking to integrate Line’s QR code payment service Line Pay into peer PayPay, which SoftBank has promoted aggressively to attract consumers away from cash, in April 2022.
Z Holdings retains its listed status, one of a number of such firms among SoftBank’s domestic holdings, despite calls for Japanese firms to unwind such structures.
Z Holdings also controls online fashion retailer Zozo Inc and office supplies firm Askul Corp.
In a separate development, SVF Investment Corp. 3, a blank-cheque firm backed by SoftBank Group Corp, cut the size of its initial public offering to $280 million from $350 million, a regulatory filing showed on Monday.
The special purpose acquisition company (SPAC) said it would now sell 28 million units, comprising shares and warrants, priced at $10 apiece in its IPO.
The firm, which did not give a reason for cutting the size of its IPO, said it will seek a target in the technology space.
SoftBank has tried to ride the mania for SPACs, with a blankcheck firm backed by the Japanese conglomerate’s Vision Fund’s managers - SVF Investment Corp - raising $604 million earlier this year, while another, SPAC SVF Investment Corp 2, intends to raise $200 million.
A SPAC headed by SoftBank’s chief operating officer Marcelo Claure is also aiming to raise $200 million.