SoftBank Unveils Its SPAC

SoftBank joins Wall Street’s recent craze in hunt for acquisitions as it looks to beef up its tech portfolio once again.

Dec. 22, 2020

So the reports were true. Yesterday, SoftBank filed the necessary documents to bring its first special purpose acquisition company — or SPAC to me and you — public on the Nasdaq.

This new SPAC will be called SVF Investment Corp and will seek to raise as much as $605 million in its IPO sometime next year. In the filing, it was indicated that the new SPAC will try to merge with a company in a “technology-enabled sector”, and even hinted towards the possibility of linking up with one of the private companies already backed by SoftBank’s $100 billion Vision Fund.

Need a quick refresher on what SPACs are? Check out our blog here.

Is that even allowed?

Apparently so!

In the filing (which you can read here if you wish), Softbank notes that they have “access to a broad range of compelling technology investment opportunities” within their ecosystem. This means some of the world’s most illustrious private companies like ByteDance and Grab. 

Of course, let’s not forget that WeWork is still in there too!

But why go for a SPAC?

Well, for one thing, everyone else is doing it. According to Refinitiv, some 235 SPACs have been listed on U.S. exchanges this year alone, raising a combined total of close to $75 billion. To put that into context, there were a reported 59 SPAC listings in 2019 raising a combined total of close to $14 billion. 

However, there are also questions over the transparency of SPAC deals, with some critics claiming that the process is just a way for private companies to go public under less scrutiny, as well as question marks over the amount of equity a SPAC sponsor takes from the deal. After the disaster that was WeWork’s planned IPO, less scrutiny might be an appealing prospect for Softbank.

And let’s not forget that 2020 has been a tough year for SoftBank, with its share price cratering back in March due to the coronavirus crash. The company has recovered well since and even been indirectly involved in some SPAC listings as Opendoor — a Vision Fund company — went public yesterday thanks to its reverse-merger with Social Capital Hedosophia II.

However, considering that the company’s Vision Fund 2 is still failing to live up to the successes of the original, a successful SPAC deal might be just the ticket to re-inspire investors.