SoftBank’s $6 Billion Margin Loan Talks Stall as Concerns Mount Over OpenAI Valuation
SoftBank Group Corp.'s effort to secure at least $6 billion through a margin loan backed by its significant stake in OpenAI has stalled, according to people familiar with the matter. The development comes just weeks after the Japanese conglomerate reduced its initial fundraising target from $10 billion.The stalling of negotiations remains unclear, as SoftBank has not yet elaborated on the reasons for the pause. However, sources confirmed that the company had previously secured commitments of some $5 billion for the loan before the recent developments took place.
Financing Challenges Hinge on Unlisted Asset Valuation
A major hurdle in these fundraising discussions involves accurately determining the valuation of an unlisted entity like OpenAI. These concerns were a persistent topic among potential creditors pitched to SoftBank.As such, SoftBank had previously downsized the loan's initial target size by 40% after facing hesitation from some potential lenders during May. The company is now actively considering various alternative fundraising methods if the margin loan cannot move forward at this time.
Expanding AI Strategy and Corporate Debt Obligations
The uncertainty surrounding the financing comes amidst SoftBank’s aggressive expansion of its broader artificial intelligence plans globally. Recently, SoftBank announced plans to invest up to €75 billion ($86.6 billion) into building AI data center capacity in France.Adding complexity is a looming $40 billion bridge financing agreement that supported prior investments in OpenAI. This debt obligation requires repayment by SoftBank in March 2027, which the company has stated will be handled through "the utilization of existing assets and other financing measures."
Outlook for Fundraising Amid Market Strength
While the margin loan stalls, SoftBank continues to explore diverse fundraising options. These include a potential issuance of additional bonds or borrowing against its holdings in other listed companies within its portfolio.The company’s overall financial footing remains robust amid the AI boom. SoftBank's stock has surged approximately 46% this year following positive reports about quarterly profit driven by valuation gains on its OpenAI investment. Furthermore, the cost of insuring the conglomerate’s debt against credit risks has fallen sharply. Credit-default swaps have narrowed by about 61 basis points to 307 from a peak above 367 basis points recorded on May 20.
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