SoftBank Prepares $5 Billion For Latin America Funding
(Bloomberg) -- SoftBank Group Corp. plans to invest an additional $5 billion in Latin American companies, according to people familiar with the matter.
The Japanese firm’s board is close to approving the new capital allocation, which would double its commitment to the region to $10 billion, one of the people said, asking to remain unnamed because the details are private. SoftBank will also expand the scope of its investments in the region to span from seed and Series-A startup rounds to taking stakes in public companies, according to the person.
The additional infusion may be used to create a SoftBank Latin America Fund 2 or to extend the existing one, launched in 2019, according to the people. SoftBank’s Chief Operating Officer Marcelo Claure will continue to lead the effort.
A spokeswoman for SoftBank said that while various discussions are underway, nothing has been decided.
SoftBank founder Masayoshi Son is stepping up his investments in technology companies after a number of high-profile debuts in recent months including Coupang Inc. and DoorDash Inc. helped push the company’s profit to an all-time high last fiscal year. Son also doubled the pot for Vision Fund 2, where the company is a sole investor, to $40 billion since the end of March. SoftBank’s portfolio across three different funds totals over 220 companies.
The company’s shares were down as much as 3.4% in Tokyo trading on Friday.
The Japanese investment firm has a long history in Latin America. In 2000, it created SoftBank Latin America Ventures to support the group’s companies in the region and invest in startups. In 2017, the parent plowed $100 million into Brazilian ride-hailing app 99. In 2018, the first Vision Fund invested $100 million in delivery startup Loggi.
The pace of investments quickened when Son created the $5 billion Latin America fund in March 2019 and put Claure in charge of it. The fund has since emerged as the most active venture capital player in the region, taking part in $18.7 billion of deals, according to data compiled by Bloomberg. It was trailed by DST Global with $16.1 billion and Sequoia Capital Operations LLC with $14.6 billion.
Claure has tapped industry veterans from Dan Loeb’s Third Point and JPMorgan Chase & Co. to help oversee the fund. Paulo Passoni joined as investment partner from Third Point to work alongside SoftBank’s Shu Nyatta. André Maciel, who ran JPMorgan’s investment-banking advisory business for Brazil, came in as a managing partner to helm the fund’s Brazil office.
A native of Bolivia, Claure made his fortune in the region before joining SoftBank. He started a wireless distribution and service provider, Brightstar, in Miami in 1997. From there, he expanded quickly into Latin America and beyond and sold a majority stake in the business to SoftBank in 2013 for $1.26 billion.
The first Latin America fund has already poured more than $5 billion into the region’s tech ventures, according to one of the people. SoftBank holds stakes in six of the 10 most valuable startups, including Mexican used-car platform Kavak and Brazilian real estate operator Loft. The Tokyo-based company booked a $1.77 billion gain on the investments last fiscal year.
The Latin America portfolio produced a 62% net equity internal rate of return as of the end of March. That compares with a 39% IRR for the first Vision Fund and 119% for Vision Fund 2. The returns have risen sharply since March to rival those of VF2, one of the people familiar said.
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