SoftBank's $22.5B OpenAI funding commitment: How will it be fulfilled?
What's the story
SoftBank Group is racing to fulfill its $22.5 billion funding commitment to OpenAI by the end of 2025. The company is exploring a range of cash-raising strategies, such as selling some of its investments and possibly using undrawn margin loans against its stake in chipmaker Arm Holdings, according to Reuters.
Fundraising efforts
Strategic moves to raise funds
To meet the funding commitment, SoftBank CEO Masayoshi Son has already sold the company's entire $5.8 billion stake in AI chip leader NVIDIA and offloaded $4.8 billion of its T-Mobile US stake. Son has also cut jobs at the company. The "all-in" bet on OpenAI is one of the biggest yet by Son as he tries to strengthen his firm's position in artificial intelligence (AI).
Market debut
IPO plans and other investments
SoftBank is also preparing to take its payments app operator, PayPay public. The IPO, which was originally scheduled for this month, has been delayed due to the 43-day-long US government shutdown that ended in November. PayPay's market debut, likely to raise over $20 billion, is now expected in Q1 of next year.
Divestment plans
Potential divestment in Didi Global
SoftBank is also considering cashing out some of its stake in Didi Global, China's leading ride-hailing platform. The company plans to list its shares in Hong Kong after being forced to delist from the US due to a regulatory crackdown in 2021. Investment managers at SoftBank's Vision Fund are being directed toward the OpenAI deal, according to sources.
Funding schedule
OpenAI's funding timeline and future plans
OpenAI has not yet received the remaining funding but expects it by the end of 2025, as per the contract. Both OpenAI and SoftBank are investors in Stargate, a $500 billion project to build AI data centers for training and inference. The project is critical to US efforts to stay ahead of China in AI technology.