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Alibaba US Share Registration ‘Not Tied’ to Future Deal: SoftBank

The ADS registration might also suggest potential selling intention by SoftBank, Citigroup analysts said this week

Softbank boss Masayoshi Son's investments in big tech stocks have gone badly over the past year.
SoftBank's Vision Fund unit reported a 2.97 trillion yen investment loss in the January-March quarter. Photo: Reuters.


Alibaba‘s recent registration of additional American Depository Shares (ADS) is not tied to any specific future transaction by SoftBank Group, a spokesperson for the Japanese conglomerate said on Wednesday.

“The registration of the [ADS] conversion facility … including its size, is not tied to any specific future transaction,” SoftBank said in a statement.

E-commerce giant Alibaba last week filed to register an additional 1 billion ADS. The move, Citigroup analysts said this week, “might also suggest potential selling intention by SoftBank”.

“Since SoftBank has been a pre-IPO investor, we believe a large proportion of those shares have not been previously registered as ADS,” Citi analysts including Alicia Yap wrote.

SoftBank chief executive Masayoshi Son told analysts he was “surprised” and had not requested the filing, according to a person familiar with the matter speaking on the condition of anonymity.

Alibaba “might have registered in advance a large number of ADS to support any future conversion plans of shareholders,” Citi wrote in a new note on Wednesday.


Origins in $20m Investment

SoftBank’s stake of around 25% in Alibaba is worth around $82 billion and has its origins in a $20 million investment in 2000. That rivals SoftBank’s own market capitalisation of around $80 billion.

Alibaba’s shares have fallen by 60% since highs in October 2020 amid a regulatory crackdown against tech firms in China.

SoftBank has used its Alibaba shares as collateral for loans and in the past trimmed its stake using derivative transactions to capture upside from any rise in Alibaba’s share price.

Investor attention is focused on potential moves by the group to raise funds as it expands investing through its Vision Fund and buys back shares after the collapse of the deal to sell chipmaker Arm to Nvidia.

SoftBank’s shares rose as much as 5.6% in morning Tokyo trading, with Alibaba’s Hong Kong shares up 6%.


  • Reuters with additional editing by Sean OMeara





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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.


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