SoftBank under pressure from investors to prop up share price

Softbank founder Masayoshi Son said the issue was being pressured to announce a new stock buying program next week as the fall in Japanese tech group stock prices caused “deep frustration” among shareholders. People with knowledge about said.

This pressure underscores the view by some SoftBank investors, including Elliott Management, an activist hedge fund that has a large stake in the company, that the only short-term catalyst for a slump in stock prices is a capital return program. ing.

This position contrasts with his son’s continued focus on spending billions of dollars on early-stage start-ups. This year, he promised to allocate another $ 20 billion to the existing $ 20 billion of the Second Vision Fund.

Investor pressure has been rising for some time. Softbank’s stock price peaked in the ¥ 10,700 range in mid-March, but has since fallen 42%.

One person who knew the deliberations directly said that Softbank had discussed the share buyback program internally over the past few weeks as it plans to announce its quarterly results on Monday. The company declined to comment.

Investors have told the Financial Times that they have spoken directly to the company and its management over the past month about buybacks.

A large investor who refused to nominate told FT that “there was a deep frustration in the shareholder base.”

Another would provide a catalyst if his son showed that Softbank was on the verge of some transformation, reflecting major acquisitions made in the past, such as British chip designer Arm. He said it was possible, but it was clear that the founder’s vision alone could no longer increase his share.

“I think the repurchase announcement will put a lower limit on this level of stock. This is positive, but answers the bigger question about what some investors are waiting for to make a big jump in the stock. No, “said one person. An investor who has held shares for many years.

These declines are partly due to Chinese regulatory crackdowns on technology companies, including Alibaba, an e-commerce group in which SoftBank holds a large stake. We also indirectly invest in many Chinese internet companies through two Vision Funds.

The fall in stock prices since March is almost in line with the end of the previous stock repurchase announced by Softbank last year.

The announcement successfully quelled the market panic caused by the pandemic, plunged SoftBank’s stock and triggered an emergency meeting at the company.

The program ultimately resulted in a $ 23 billion share buyback, funded by the disposal of assets, rising nearly 300% from the lowest level in 2020 to the highest level this year.

“Masa has to worry. SoftBank’s morale is pretty low after China’s crackdown and the recent resignation of Vision Fund’s senior management,” said a person near the company. He added that repurchase is not a “permanent solution.”

Share repurchases allow millionaire founders to increase ownership of the group by more than one-third and block certain shareholder proposals.

SoftBank under pressure from investors to prop up share price Source link SoftBank under pressure from investors to prop up share price

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