The Japanese conglomerate is exploring alternative fundraising options as it faces a $40 billion bridge financing due in March 2027
Sundry Photography / Getty Images
An effort by SoftBank Group to secure at least $6 billion via a margin loan collateralized by its OpenAI holdings has hit a wall, Bloomberg reported, citing people familiar with the matter. Other fundraising avenues are being weighed, and a return to the margin loan remains possible down the road, those sources said.
The reasons for the breakdown are unclear. Before the process broke down, approximately $5 billion had already been lined up for the loan, with sources noting uncertainty over whether the pledges were formal or informal. SoftBank declined to comment.
The stalled talks mark a further setback for the fundraising effort. The loan target had previously been trimmed by 40% — from $10 billion down to at least $6 billion — after a number of prospective lenders balked. Among the issues that gave creditors pause was how to put a price tag on a private company like OpenAI that has no public market to set its worth.
OpenAI's announcement Monday that it had confidentially submitted IPO paperwork — with Goldman Sachs $GS Group and Morgan Stanley $MS tapped for a listing potentially arriving as early as autumn — had nudged some prospective lenders toward a more favorable view of the deal. Despite that development, the loan discussions have not moved forward.
Pressing down on all of this is a $40 billion bridge loan SoftBank took on to fund its OpenAI commitments, with repayment due in March 2027. The company has indicated it intends to cover that obligation by drawing on assets it already holds alongside additional financing steps.
Hua Cheng, head of Asia credit research at AllianceBernstein, said the stalled loan is not necessarily cause for alarm on its own. "The margin loan is just one piece of a much larger puzzle, and unless we see a clear deterioration in their ability to raise funds this way, we don't view it as a standalone red flag," Cheng said. "The best-case scenario is an OpenAI IPO this year, with SoftBank offloading part of its stake to pay down debt."
Wednesday's session saw SoftBank shares drop as much as 9.7%, a single-day move that compounded a broader rout totaling more than 20% across the previous five trading days, MarketWatch noted. Until last week, SoftBank had held the distinction of being the highest-valued publicly traded company in Japan.
Join 500,000+ readers who start their day with Quartz.
By subscribing, you agree to our Terms of Service and Privacy Policy.
