SoftBank Group said on Thursday it would recognise a 359.6 billion yen ($2.7 billion) gain from the transfer of a stake in Alibaba Group Holdings to a wholly-owned subsidiary called Shiodome Project 17 GK.
The intra-group transaction has no impact on the Japanese technology investor’s group earnings, the company said.
Chinese e-commerce giant Alibaba’s shares jumped on Wednesday after it said it would split into six units and explore fundraisings or listings for most of them, marking the biggest restructuring in its 24-year history.
SoftBank said the transfer of 178.7 million Alibaba shares from the group holding company was to “improve management efficiency through the centralized management of these shares, in light of the potential to use them for financing in the future.”
A SoftBank spokesperson said the timing of the share transfer had nothing to do with the Chinese company’s restructuring announcement and the ensuing surge in Alibaba shares.
The $2.7 billion in extraordinary income will be booked in SoftBank’s parent-only earnings results for the year to March 31 as part of accounting procedure and it would “not be like cash pouring in, so we can put it in some use,” he said.
SoftBank has no specific financing plans at the moment, he added.
SoftBank, led by founder and chief executive Masayoshi Son, has a 13.7% stake in Alibaba.
SoftBank said in a statement that the gain on the sale of investment securities included a gain of 117.1 billion yen related to a prepaid forward contract that was settled in October 2022 and had been previously deferred.
It booked a gain of $34 billion last year by cutting its stake in Alibaba, as the firm sought to shore up its cash reserve amid steep losses incurred by its Vision Fund unit.
Son bought into Alibaba for $20 million in 2000 and the Chinese firm’s growth to become one of the world’s biggest e-commerce companies helped burnish his tech investor credentials.
But Alibaba has lost more than two-thirds of its value from highs in late 2020, hit by Beijing’s crackdown on the tech sector that included a hefty fine on Alibaba and scrutiny of founder Jack Ma’s business empire.
Shares in SoftBank closed down 2% on Thursday prior to the announcement, lagging a 0.4% drop in the broader market.
Reuters