Funny money ...
ft.com
SoftBank executives balk at big loans to invest in Vision FundSome staff have been encouraged to fund stakes by borrowing more than 10 times their salary
Given the bullish persona of founder Masayoshi Son, several SoftBank executives have said they understand it is 'expected' that they will take out the loans © BloombergSome SoftBank executives are balking at taking on large personal loans to buy into the Japanese group’s portfolio of technology companies, an investment scheme described internally as a test of loyalty to founder Masayoshi Son.
The scheme encourages participants to take a huge personal bet on SoftBank’s $97bn Vision Fund — the vehicle which has come under intense scrutiny after the collapse in value of WeWork, the shared office provider that is one of its bigger investments.
SoftBank offers the loans on a sliding scale depending on salary and length of tenure. Some executives have been encouraged to borrow more than 10 times their base salary, according to people familiar with the situation.
Participation is not obligatory, according to people close to the company, but some employees worry that opting out of it may hurt their career.
Given the bullish persona of Mr Son, and the culture that pervades SoftBank, several executives have said they understand it is “expected” that they will take out the loans, despite what many perceive to be the high risk of doing so.
As SoftBank has sought to build record war chests for tech investment, it has relied on employees for a significant contribution. They are estimated to account for about $8bn of the first fund. People familiar with discussions said they had been allocated more than $15bn of the second Vision Fund, which has a headline value of $108bn but few confirmed outside investors.
RecommendedThe loans are being offered to a large number of senior executives across the group. Under the scheme, executives are offered loans from a UK-based subsidiary of SoftBank, Triangle Lender, which lists Mr Son’s top lieutenant Rajeev Misra as a director.
The outsized loans have been offered as the primary way for senior executives to invest in the Vision Fund. People familiar with the scheme said that executives were actively discouraged from investing their own cash.
The employee concerns about the loans come as the perceived risks of technology investing of the sort championed by the Vision Fund appear to have risen sharply. Veteran asset managers have described the sudden plunge in the pre-IPO valuation of WeWork as a potential signal that the Vision Fund may now carry writedown risks.
A large part of the employee contributions are funded personally by Mr Son, known for his debt-fuelled dealmaking. The billionaire founder has already pledged 38 per cent of his shares in SoftBank as collateral for personal loans from 19 financial groups globally including Mizuho, Credit Suisse, Julius Baer and Switzerland’s J Safra Sarasin, according to a filing in June.
SoftBank declined to comment on the employee incentive scheme. |
