US fund builds US$1b SoftBank stake

TOKYO: United States hedge fund Tiger Global has built a stake worth more than US$1 billion (RM4.04 billion) in SoftBank Group Corp as it considers the Japanese firm to be undervalued, said a source with direct knowledge of the matter, driving SoftBank shares up as much as 6.8 per cent.

Tiger, which managed around US$22 billion in assets, told investors in a letter that SoftBank’s stock price had not increased over the last five years even though its holding in Chinese e-commerce giant Alibaba had added more than US$90 billion in value, said the source on Wednesday.

The Japanese tech and telecoms conglomerate, run by billionaire Masayoshi Son, has become deeply leveraged in its pursuit of winning investments. Besides Alibaba, it has stakes in US telecoms firm Sprint Corp and Yahoo Japan Corp.

Son, at the company’s annual general meeting for shareholders last month, said a “conglomerate discount” was weighing on the company’s shares and the stock should be trading above 14,000 yen rather than where they were then, at around 8,000 yen, accounting for its investments.

“We continue to believe the market significantly undervalues our stock and we welcome the support from a sophisticated institutional investor like Tiger Global,” said SoftBank in an email yesterday.

SoftBank’s shares rose to as high as 9,413 yen (RM337.92) and were later trading at 9,376 yen, up 6.4 per cent, yesterday.

SoftBank’s shares, which have increased 54 per cent over the past five years, value the company at around US$87 billion and trade at roughly 10 times forward earnings.

The company had about US$123 billion of debt as of endMarch and has a debt-to-equity ratio of 3.97, compared with an industry median of 0.10.