SoftBank Nearing $5B Term Loan Backed By Arm Shares To Fund Investment In OpenAI: Report

SoftBank Group Corp. (SFTBY), the Japanese investment holding company led by Masayoshi Son, is reportedly offering shares of its Arm Holdings Plc. (ARM) subsidiary as collateral to finance an investment in U.S. artificial intelligence (AI) startup and Stargate project partner OpenAI.

Minato, Tokyo-based SoftBank is nearing a deal with a few lenders for a margin loan, amounting to $5 billion, offering shares of Arm as collateral security, Bloomberg reported, citing people familiar with the matter. The debt raised through the margin loan would go toward additional investment in OpenAI, the report added. The total margin loans from Arm shares would now be $18.5 billion, including the $13.5 billion raised previously. Of the $13.5 billion, $5 billion is yet to be drawn, the report said.

Arm stock has added 38.3% this year, thanks to its exposure to AI, while the SoftBank stock, traded over the counter in the U.S., has jumped 160%. While the former has elicited ‘extremely bullish’ sentiment from among the users of the Stocktwits platform as of early Friday, retail mood toward the latter remained ‘bearish.’ The message volume on the Arm stream was ‘extremely high,’ while that on the SoftBank stream was ‘high.’

The Son-led company sponsors tech-focused venture capital funds branded as “Vision Funds,” which primarily invest in both private and public tech companies. Specifically, the Vision Fund 2 was set up in 2019 to invest in AI-driven ventures and later-stage technology companies.

While speaking at SoftBank’s annual shareholder meeting held in July, Son expressed hopes to transform his company into the “world’s top platformer for ASI [artificial super intelligence],” as he believed that it would be a winner-takes-all arena. “I’m all in,” he had said. British chipmaker Arm is an AI-leveraged company in its own right, and SoftBank has also acquired a U.K.-based AI accelerator manufacturer.

SoftBank and OpenAI are lead partners in the private Stargate AI project announced by President Donald Trump just after his inauguration. The investment firm is leading a $40 billion funding round into OpenAI, with $10 billion already invested by SoftBank and other firms, a CNBC report said, adding that the remaining $30 billion in funding will be made by December.

The Japanese firm is also awaiting the closure of its $6.5 billion acquisition of Ampere, which makes server chips based on the Arm architecture. The proposed deal has run into rough weather amid regulatory scrutiny. Earlier this week, the company announced an agreement to buy Swedish industrial giant ABB’s Robotics unit for $5.4 billion.

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