Masayoshi Son’s keen sense of opportunism has allowed him to pull off some of his biggest deals to date. That isn’t an insult.
Brexit and the subsequent drop in the British pound allowed SoftBank Group Corp. to snap up semiconductor company ARM Holdings Plc. in 2016 for a relative bargain compared to the headline price.(1)
Internal troubles at Uber Technologies Inc. paved the way for Masa to grab a 16.3 percent stake in the world’s hottest startup last year, making SoftBank’s Vision Fund its largest shareholder.
So it made sense that when German payments provider Wirecard AG got caught up in allegations of accounting wrongdoing, which it has refuted, Masa would be standing by. As of Tuesday’s close, the company’s shares remain 37 percent below their September peak.
Yet to conclude that the SoftBank founder is only buying into these companies to take advantage of their troubles misses the bigger picture. Each case matches Son’s wider strategy of driving a “300 year Information Revolution.” So while startups like Uber and its Southeast Asian rival Grab Holdings Inc. were obvious items on Son’s shopping list, the companies that tie them together are just as important. He wants a portfolio of investees that lean on each other.
More than a dozen years ago, Steve Jobs recognized that having customers’ credit cards on file meant that Apple Inc. could make paying for things (at first, music) seamless. Removing friction boosted sales, and it’s this understanding that propelled e-commerce, with Amazon.com Inc.’s one-click system, and subsequently the Ubers and AirBnbs of the gig economy.
It’s within this context that SoftBank agreed to invest 900 million euros ($1 billion) via five-year convertible bonds, corresponding to about 5.6 percent of Wirecard’s common stock, the Munich-based company said Wednesday. The deal includes a strategic partnership which, among other things, will help Wirecard expand into Japan and South Korea, it said.
And Wirecard fits in perfectly. Under the leadership of CEO Markus Braun, the company has made over a dozen acquisitions in recent years to extend beyond its early base as a provider of financial services for the gambling and adult-entertainment sectors. Today it counts Uber among its clients.
Consumers may not know, or care, that ARM’s chip technology underpins almost every device they own. Much in the same way, payments providers like Wirecard grease the wheels of the new economy. With this new stake, SoftBank adds an important piece of the e-commerce and sharing ecosystem to its lineup.
While a 5.6 percent stake isn’t enough for SoftBank to assert much control, the cooperation deal could provide the real value to both sides. Apart from expanding its geographic footprint, the tie-up with SoftBank allows Wirecard to go deeper into some of the world’s hottest startups – SoftBank and the Vision Fund own stakes in a raft of upstarts including Grab, e-commerce company Coupang, news and live-streaming provider Bytedance Ltd., and payments company Paytm.
Having a major global payments provider in his portfolio could also prove useful when Son wants to negotiate an investment into other startups, which will likely need someone to help process payments in a cashless world.
Assuming Wirecard gets past its legal issues, it looks like Masayoshi Son has once again combined good planning with fortuitous timing to create his most-favored asset: opportunity.
(1) SoftBank offered a large premium over ARM’s prevailing price, but a weaker pound and strong yen narrowed that price considerably.
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Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.
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