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Going Through A Soft Patch

17 October 2018 by lberuti

SOFTBK ( Softbank Group Corp ) depends on Saudi money more than other firms. Almost half of the money invested in its Vision Fund, the biggest tech investment vehicle in the world, was provided by the Middle Eastern kingdom. The fund has already invested billions of dollars in businesses and SOFTBK’s founder said it plans to raise similarly sized funds every few years. The political pressure currently applied on Saudi Arabia following the disappearance of journalist Jamal Khashoggi after he entered the Saudi consulate in Istanbul last week is definitely a worry for the company. Although its COO said it is business as usual at companies backed by the Vision Fund, he also said he is “anxiously looking at what is happening”. Indeed, SOFTBK may find it difficult to distance itself from Saudi Arabia given their strong financial ties. It could make some start-ups reluctant to accept the Vision Fund’s money, and it could also make raising capital for future funds more difficult. Over the last week, investors have gradually pushed SOFTBK’s 5-year risk premium wider. From a recent tight of 175bps, it now trades at 195bps.