SoftBank Reportedly Planning $100 Million Investments in 5 Indian Startups
- ByStartupStory | May 26, 2023
According to sources familiar with the matter, SoftBank is engaging in discussions with approximately four to five Indian startup companies, intending to make investments ranging from $50 million to $100 million in each of them. This information was reported by Business Standard.
According to reports, SoftBank plans to invest in and provide support to selected Indian startups with the aim of propelling them to the next level and assisting them in achieving unicorn status. Sources familiar with the matter informed Business Standard that the company is specifically targeting investments in the business-to-consumer (B2C) sector, enterprise, and media, with valuations ranging between $400 million and $500 million. The reported investment amount is lower compared to SoftBank’s previous funding rounds in Indian companies.
Additionally, according to the report, SoftBank is actively seeking opportunities to invest in companies where existing investors are seeking an exit through a secondary sale, particularly if these companies have delayed their IPO plans. If these potential deals materialize, SoftBank may consider investing more than $100 million in each of these companies.
On May 24th, S&P Global Ratings downgraded SoftBank Group Corp’s long-term rating, pushing it further into junk territory. This prompted the Japanese tech investment conglomerate to express concerns regarding the downgrade. The rating agency revised SoftBank’s rating from BB-plus to BB, attributing the decision to the company’s exposure to unlisted entities that are vulnerable to fluctuations in the external environment.
“There is a marked lack of rationality in the explanation,” SoftBank Chief Financial Officer Yoshimitsu Goto had told Reuters. SoftBank CEO Masayoshi Son said that he would “play defence” with prudent financial management given weakness in tech valuations. As per the statement, “It is extremely regrettable that our financial soundness was not properly assessed, and we will continue our dialogue with S&P.”
In a noteworthy development, SoftBank is embarking on its first battle against credit-rating agencies. The company has been engaged in a prolonged dispute with Moody’s Investors Service, with SoftBank withholding information from the agency since March 2020. On May 11th, SoftBank informed stock exchanges that it divested slightly over a 2 percent stake in One97 Communications Limited, the parent company of Paytm, through a series of open market transactions starting from February 2023. This move was undertaken to comply with the takeover regulations of SEBI, the capital market regulator.
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