SoftBank founder has proposed new US-Japan sovereign wealth fund
What's the story
SoftBank founder Masayoshi Son has proposed a joint sovereign wealth fund (SWF) between the United States and Japan. The fund would primarily focus on investing in technology and infrastructure projects on a large scale. The proposal has been discussed with US Treasury Secretary Scott Bessent, but has not been formally presented yet.
Fund details
Proposed fund to require $300B in initial capital
According to Bloomberg, the joint fund would probably need about $300 billion in initial capital and heavy leverage to work. The SWF would be jointly owned and operated by the US Treasury and Japan's finance ministry. Each of them would hold a major stake in this proposed fund. Limited partner investors could also be permitted, giving retail investors from both countries a chance to participate.
Financial strategies
US Treasury is seeking new revenue streams
Bessent has been actively looking for new revenue streams for the Treasury that don't involve raising taxes. The proposal for a joint US-Japan sovereign wealth fund comes at a strategic time and could potentially provide such a solution. However, neither SoftBank nor the US Treasury has commented on this proposal to date.
Company profits
SoftBank's financial performance
Amid talks of the proposed fund, SoftBank Group reported a 124% rise in profit owing to valuations of tech start-ups such as ByteDance and OpenAI. The company posted a net income of 517.18 billion Yen ($3.5 billion) in its fiscal fourth quarter, boosted by the Vision Fund which turned to profit on the back of gains from investors such as ByteDance and China's Didi Global Inc.