Hedge fund Elliot Management Corporation, a fund manager known for shareholder activism, has steadily hoard more than US$2.5 billion stakes in Japan’s Softbank Group Corp as part of an extensive push for modification at the Japanese conglomerate.
Elliot, founded by billionaire Paul Singer, is a New-york based company known as a powerful activist investor, often searching to influence a company administration.
SoftBank is among Elliot’s largest stake, as said by sources familiar with the matter. At current market prices, the expenditure would be equal to about 3 percent of the market value of SoftBank.
Together with founder and CEO Masayoshi Son, Elliott Management spoke with a handful of high-ranking SoftBank officials. They also have met with his subordinates namely Chief Financial Officer Yoshimitsu Goto and director of the Vision Fund Rajeev Misra, the sources stated. The discourse between both companies has so far been cooperative, according to several reports.
The fund manager advocates changes to SoftBank’s corporate strategy which he believes will raise the value of the business.
The proposed amendments with the leadership of the organization have centered on ways of improving its corporate governance. It also requires greater transparency and better governance of SoftBank’s Vision Fund investment decisions. Last year, the $100 billion mega-fund came down below the microscope because of its involvement in the IPO implosion at WeWork.
SoftBank Data showed a $6.5 billion deficit last November, due in part to its attempts to pull out its WeWork stake. Such setbacks sent out the stock price plummeting, but SoftBank nevertheless owns a large stable of portfolio companies, amid its troubles.
Elliott, who administrates $40 billion in assets, has had discourse with the administrators of SoftBank and is calling on the organization to repurchase some $20 billion of its stock, develop its governance by enhancing its board’s independence and uniqueness and developing transparency, the sources said.
“Elliott’s substantial investment in SoftBank Group reflects its strong conviction that the market significantly undervalues SoftBank’s portfolio of assets,” a spokesperson for the firm said. “Elliott has engaged privately with SoftBank’s leadership and is working constructively on solutions to help SoftBank materially and sustainably reduce its discount to intrinsic value.”
CEO Son himself admitted that his “investment decision” was weak in investing billions into the struggling real estate firm, only worth a fraction of its $47 billion peaks private-market valuation.
SoftBank shares increased by 8 percent in Tokyo early Friday morning, granting the corporation a market capitalization of around $95 billion.
Elliott claims that by selling a small portion of its publicly traded shares and making its acquisitions at a steep discount, SoftBank will raise funds for share buybacks, insiders said.
Mr. Son’s 22 percent stake in SoftBank, as revealed by the organization as of September 2019, is a powerful tool to counter every other activist campaign since major business decisions require the support of two-thirds of the shareholders who voted.