SoftBank's $100 billion fund would breach its 25% debt ceiling if funded alone

Masayoshi Son is seeking up to $100 billion from Gulf investors for an acquisition fund, the Financial Times reports. SoftBank's debt ratio was 13% in June, against a 25% ceiling. Funding the whole plan alone would take it to about 30%; staying within 25% limits its contribution to about $53 billion.

The Financial Times reports that Masayoshi Son wants up to $100 billion from Gulf investors. SoftBank could not fund that alone without breaching its own debt ceiling. Its last OpenAI cheque had cleared only eight days earlier.

SoftBank's own figures show what the buying would cost its balance sheet. Carried alone, a $100 billion programme takes loan to value, the share of its assets funded by debt, to about 30%. The most it could carry alone and stay at 25% is about $53 billion. The FT does not say why Son wants outside money, and the OpenAI commitment is already paid and refinanced.

According to the Financial Times, as relayed by Reuters, Son is seeking up to $100 billion from Gulf investors. The vehicle would acquire companies and improve their operations using AI and other advanced technologies. Son has held early talks in recent weeks, the FT reported. SoftBank did not respond to a request for comment.

On 1 October SoftBank Group put out a short release. It said the last $10.0 billion of its $30.0 billion OpenAI follow on had been executed through Vision Fund 2.

SoftBank's 1 October release said the tranche was funded with the proceeds of the foreign currency senior notes sold on 24 September. It put cumulative investment in OpenAI at $64.6 billion, an ownership interest of about 13%. It also reported that all borrowings under the bridge facility had been repaid, with no undrawn commitments remaining.

Loan to value is SoftBank's adjusted stand alone net interest bearing debt divided by the equity value of its holdings. Both halves move. SoftBank's August finance presentation shows net debt of ¥10.8 trillion, about $67 billion, at 30 June. Holdings stood at ¥83.1 trillion, about $512 billion.

The ratio was 13.0%, down from 17.0% in March. Higher values for the holdings took 8.0 points off the ratio. New investments put back 4.2 points.

That calculation only works if an investment raises both sides of the ratio. Debt and assets grow together. Net debt rose ¥2.7 trillion on new investments, yet the ratio rose just 4.2 points, because the assets bought joined the holdings.

The same document sets the policy. Loan to value stays below 25% in normal circumstances, with a ceiling of 35% even in extraordinary ones. SoftBank must also hold at least two years of bond redemptions in cash. Cash stood at ¥2.3 trillion.

Part of that headroom is already used. Since June SoftBank has put in the July OpenAI tranche and the October one. It completed the roughly $3.1 billion purchase of DigitalBridge on 30 September. It also planned $5.4 billion for ABB Robotics in 2026.

Those four items come to $28.5 billion, or ¥4.63 trillion at SoftBank's own rate of 162.39 yen to the dollar. Part of ABB's price is planned to be paid from $1.75 billion of buyout financing, which would slightly reduce the ratio calculated below. The assets bought count in the denominator, so debt and holdings both rise.

The ratio becomes (10.8 + 4.63) divided by (83.1 + 4.63). That is about 18%, at cost and with the holdings otherwise flat.

A $30 billion cheque into a Gulf fund would add ¥4.87 trillion to both sides. That takes the ratio to about 22%.

Funding the full $100 billion alone would add ¥16.24 trillion and produce about 30%. That is above the 25% ceiling and below the 35% extraordinary threshold.

The most SoftBank could put in alone and still sit at 25% is about ¥8.7 trillion, or $53 billion. That is a little over half the reported ask. A full $100 billion programme inside the ceiling would need other investors to carry nearly half.

The result is sensitive to the holdings. Suppose they lost a third of their value, to ¥55.4 trillion. The $30 billion cheque alone would then give roughly 31%.

The timing does not support interpreting the fund as a rescue. After a bridge loan that reached $30.0 billion, a distressed borrower would be scrambling for cash. Yet in SoftBank's 9 September notice the company said it would prepay the entire outstanding balance of $25.9 billion on 15 September. That was nine days before the 24 September notes were priced.

At 13% in June, with the bridge cleared, SoftBank is choosing how to own its next acquisitions. The August presentation listed sources of money for repayment. It named a $10.0 billion financing agreement using OpenAI shares, a $2.0 billion sale of listed shares, domestic hybrid bonds and foreign currency senior bonds. Borrowing against OpenAI shares is itself leverage, so the case rests on the ratio and the timing.

The structure has a precedent. SoftBank's 2017 release on the first Vision Fund described over $93 billion of committed capital. SoftBank would put in a maximum of $28 billion, with the Public Investment Fund and Mubadala among the other limited partners. That maximum was about 30% of the total.

The release said the fund would take minority and majority interests in private and public companies. The 2026 version, as reported, would acquire companies and improve their operations using AI. A repeat of the old split, roughly 30%, would put SoftBank's share of a $100 billion fund near $30 billion. That is well inside the $53 billion that its ceiling would permit.

The cost of capital also matters. SoftBank's September notes had three dollar tranches, sold on 24 September. The first carried 8.625% on $1.0 billion due 2030, the shortest of the three.

Two tranches were $4.5 billion each. The one due 2032 paid 9.25%. The one due 2034, the longest, paid 9.75%.

Two euro tranches paid 7.125% and 8.000%. Blended at about 9.2% on $11.1 billion, that is roughly $1.03 billion a year in interest.

A sovereign limited partner is a different kind of capital from a bondholder. It normally expects a preferred return plus a share of the profits. What return the investors would demand is the open question, against the 9.75% SoftBank pays on its longest dollar bond. Whether SoftBank saves money against its bonds turns on terms nobody has published.

A signed fund with outside capital would mean fewer dollar issues at the 2032 and 2034 coupons. Without a fund, SoftBank is more likely to repeat its September borrowing pattern.

About ¥2.1 trillion left the company in the quarter through the July OpenAI tranche and the DigitalBridge purchase. The proceeds of the September notes are earmarked for the October tranche, which falls in the next period.

SoftBank reports second quarter results on Tuesday 10 November. Net debt at 30 September will stand above June's ¥10.8 trillion. If SoftBank signs a fund share well below the $53 billion that the 25% line allows after all four commitments, it will have chosen that smaller contribution rather than reached its debt limit.