SoftBank says additional Alibaba ADS registration not related to future deal

Alibaba’s recent registration of additional American Depository Shares is not tied to any specific future SoftBank Group Corp transactions, a spokesperson for the Japanese conglomerate said Wednesday.

“The ADR conversion facility record, including its size, is not tied to any specific future SBG transaction,” SoftBank said in a statement to Reuters.

Last week, e-commerce giant Alibaba applied to register an additional one billion U.S. Deposit Shares.

The move, Citigroup analysts said this week “may also suggest potential selling intent by SoftBank.”

“Since Softbank was a pre-IPO investor, we believe a large portion of these stocks were not previously registered as ADS,” Citi analysts, including Alicia Yap, wrote.

SoftBank Chief Executive Masayoshi Son told analysts he was “surprised” he hadn’t requested the filing, according to a person familiar with the matter speaking on condition of anonymity.

SoftBank shares rose 5.6% in Tokyo trading, with Alibaba shares in Hong Kong rising 6%.

Alibaba “may have registered a large number of ADSs in advance to support any future shareholder conversion plans,” Citi wrote in a note Wednesday.
SoftBank’s roughly 25% stake in Alibaba is worth around $82 billion and originated in a $20 million investment in 2000.

That rivals SoftBank’s own market capitalization of around $80 billion.

Alibaba shares have fallen 60% from October 2020 highs amid a regulatory crackdown on tech companies in China.

SoftBank used its Alibaba shares as collateral for loans and reduced its stake using derivatives to take advantage of any rise in Alibaba’s stock price.

With SoftBank’s fundraising plans in disarray following the collapse of chip designer Arm’s sale to Nvidia, the spotlight is on other potential asset sales as the group expands investments through its Vision Fund. and redeem shares.

SoftBank’s decision to list British chip designer Arm is good news for New York, bad news for London and the best option left for the Japanese group after its blockbuster sale to Nvidia collapsed.

Arm, whose technology underpins the global smartphone industry, is very likely to float on the Nasdaq, said the CEO of SoftBank, where he will tap into the appetite of U.S. investors and the expertise of analysts.

The move is a blow to London where Arm traded, with a secondary listing on Nasdaq, from 1998 to 2016 before being sold to SoftBank for $32 billion.

SoftBank shares are down about half from March highs of last year.

The group posted a profit in the October-December quarter after a rise in valuations of Vision Fund’s private assets offset a fall in shares in its listed portfolio.

The group’s loan-to-value ratio rose to 22% from 19% three months earlier as SoftBank’s net asset value fell and debt rose. Son pledged to keep the ratio below 25% in normal times.