SoftBank bags a $10B margin loan against OpenAI stake
What's the story
SoftBank Group has secured a massive $10 billion margin loan, using its stake in US tech giant OpenAI as collateral. The move marks another major step in SoftBank's investment strategy focused on artificial intelligence (AI). The two-year loan agreement was signed with Goldman Sachs, JPMorgan Chase, Mizuho Securities USA Apollo Global Funding, and Sumitomo Mitsui Banking Corp.
Loan details
Loan to be utilized for general corporate purposes
The $10 billion margin loan will be used for general corporate purposes of the group and its Vision Fund II-2. The company is SoftBank's second tech investment pool.
The company is the guarantor of this borrowing, which it plans to draw down this month, according to its latest financial report.
However, certain conditions like a sharp drop in OpenAI's preferred shares' value could require early repayment or cash posting by the borrower.
Investment strategy
SoftBank's total investment in OpenAI will hit nearly $65B
The margin loan comes after a record $40 billion bridge loan that SoftBank secured for its investments in OpenAI.
This attracted a new group of 21 lenders last month during a broader syndication phase.
By October, SoftBank's total investment in OpenAI is expected to reach nearly $65 billion, partially funded by loans as investors become wary of rising debt and uncertain returns on its biggest bets.