SoftBank Seeks $100 Billion From Gulf Investors for AI and Robotics Fund

A New Kind of Fund

SoftBank founder Masayoshi Son is seeking up to $100 billion from Gulf investors to establish a fund that would acquire established companies and improve their operations using artificial intelligence and robotics, according to the Financial Times. Unlike SoftBank's previous investment vehicles, which primarily financed technology companies, the proposed fund would purchase businesses that have not yet adopted AI and then introduce advanced technologies to increase their value, a relatively novel model for monetizing artificial intelligence.

Son has reportedly approached influential investors in the Middle East, including senior figures in the United Arab Emirates, in recent weeks to secure capital for the acquisitions. Neither the fund's establishment nor its financing is guaranteed at this stage, and it remains unclear whether the vehicle will only finance acquisitions or also fund the development of SoftBank's robotics unit.

Roze at the Center

Roze, SoftBank's robotics and physical AI division, would reportedly play a major role in transforming the acquired businesses, though exact details remain unclear. Son also intends to eventually take Roze public at a substantial valuation, adding a potential new listing to the group's portfolio of AI-related ventures.

Financial Position and Risks

The initiative comes as SoftBank faces growing concerns over its $65 billion investment in OpenAI and the delayed initial public offering of the AI company. SoftBank has financed its investments through internal resources, external capital, and borrowing partly secured by its holdings in Arm, and its financial well-being significantly depends on the valuation of OpenAI, which has yet to become highly profitable.

Son has previously attracted substantial financing from Middle Eastern sovereign wealth funds. Saudi Arabia's Public Investment Fund and Abu Dhabi's Mubadala participated in SoftBank's original $100 billion Vision Fund in 2017. Vision Fund 1 has accumulated approximately $29 billion in investment gains, while Vision Fund 2, which holds the OpenAI investment and is primarily financed by SoftBank, generated $20.5 billion as of June.

Abu Dhabi has also expanded its AI investments through MGX and G42. Last month, SoftBank raised more than $11 billion through the largest junk bond issuance on record, with yields reaching 9.75 percent, reflecting the high cost of borrowing. As of June, the company's net asset value stood at 72.3 trillion yen ($456.57 billion), and its loan-to-value ratio was 13 percent, well below its normal operating limit of 25 percent. However, a substantial portion of SoftBank's assets is tied to technology companies including Arm and OpenAI, so a decline in their valuations could push the ratio to uncomfortable levels even without further borrowing.

Sources: Tomshardware