Softbank, World Bank Invest $520 Mln for Internet (Update1)
More stuff on the World Bank and Softbank from Bloomberg
By Hanabusa Midori
Softbank, World Bank Invest $520 Mln for Internet (Update1)
(Increases sum in 1st paragraph based on latest World Bank
information; adds details from IFC in 2nd, 9th paragraphs.)
Tokyo, Feb. 14 (Bloomberg) -- Softbank Corp., Japan's
biggest Internet business investor, and the World Bank will
invest $520 million to help companies in less-developed countries
take their businesses on line.
Softbank will provide about $370 million while the IFC will
pitch in $82.5 million and unnamed private investors will supply
the rest, according to Mohsen Khalil, the IFC official leading the
project. Of the total funds, $200 million will create a new
company to invest in developing countries and $320 million will go
to existing venture capital funds in China and Latin America and
also fund technology consulting, Khalil said.
For Softbank -- which already has stakes in Internet
successes such as Yahoo! Inc. and E*Trade Group Inc. -- the tie-
up could make it easier to identify promising Internet startups
in some of the world's most populous countries. The World Bank
will be able to tap into Softbank's investment capital as a way
of encouraging governments to build Internet capacity.
``Softbank isn't a company that simply imports (Internet
businesses) from the U.S. to Japan,' said Hiroshi Yamashina, an
analyst at Goldman Sachs Japan Ltd. who specializes in the
Internet industry. ``It had its sights on Europe, Asia and Latin
America, and with the latest joint venture is stepping onto the
world stage.'
Shares Soar
Softbank shares rose 21,000 yen, or 14.2 percent, today to
169,000 yen ($1,560), a record high. The stock has climbed 73
percent this year after a 14-fold increase in 1999. Yamashina,
who has the stock on his ``strong buy' list, said he is
considering raising his current target of 184,000 yen.
Softbank will contribute $150 million and the IFC $50
million to set up Softbank Emerging Markets (SBEM), which will
support Internet start-ups in developing countries through joint
ventures with local entrepreneurs. SBEM will be based in Silicon
Valley, California.
The IFC will also invest about $30 million in Softbank's
Internet investment funds for Latin America and China and a
further $20 million for technology consulting.
``We discovered Softbank; they didn't discover us,' said
World Bank President James Wolfensohn. ``We were looking for a
company with a body of knowledge and active companies operating
on the Internet.'
The IFC was created by the World Bank in 1956 to promote
private sector businesses in developing countries. The IFC made
loans and equity investments valued at $3.5 billion in more than
100 developing countries in 1999, and its average financing is
about $100 million, the agency said.
Holding Companies
Softbank has stakes in about 300 Internet-related companies.
In Japan, where it is based, Softbank's 42-year-old leader
Masayoshi Son has pushed everything from selling goods to trading
stocks on line. His group also is seeking to enter the banking
business and is collaborating with the U.S. National Securities
Dealers Association to set up a Japanese version of the Nasdaq
electronic stock market this year.
Softbank will set up holding companies under SBEM for major
Internet content providers such as Yahoo!, online retailer Buy.com
Inc., Chinese Internet startup Alibab.com and health-care portal
WebMD Inc., which will then invest in local startup ventures, Son
said.
These will act as holding companies, and will sell their
shares to the public from June next year, he added.
In many developing nations, infrastructure, computer
networks and cheap access to the Internet need to be established
first to lure content providers, who will then pull in the
investors, he said. Softbank plans to enlist the help of other
global Internet companies.
`Dream Team'
``We want to bring in a `Dream Team' of infrastructure
providers and a `Dream Team' of content providers,' Son said.
Candidates for the `Dream Team' include Cisco Systems Inc., Intel
Corp., Oracle Corp., Hewlett-Packard Co., Sun Microsystems Inc.,
Yahoo, WebMD and E-Loan Inc., he said.
SBEM plans to announce its first investment in an Internet
company in May. The newly created incubator of Internet startups
aims to establish a global center to aid the transfer of the
latest Internet technologies to developing countries.
IFC and Softbank haven't decided on which countries they
will concentrate on first. However, the partners intend to give
priority to countries whose governments are supportive to the
idea of providing wider Internet access to its people, Wolfensohn
said.
``In the last 24 hours we've already received calls from
some presidents asking to get on the list,' he said.
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