SoftBank and Saudi plan $100bn tech fund

SoftBank and Saudi Arabia’s sovereign wealth fund are preparing to launch a new tech fund that will manage as much as $100bn, in a move that will create one of the largest tech investment funds in the world.

The new fund, dubbed the SoftBank Vision Fund, will be based in London and seeded with $25bn from SoftBank and up to $45bn from Saudi Arabia’s sovereign wealth fund over the next five years, according to a statement from Masayoshi Son’s Japanese telecoms group.

The unusually large fund underscores investors’ enduring appetite for tech sector investments, even amid concerns in Silicon Valley about inflated valuations for late-stage start-ups such as Uber and Airbnb.

At $100bn, the new fund would be the same size as all funds raised by US venture capital firms over the last two and a half years, according to data from the National Venture Capital Association.

SoftBank said the fund would be investing over a five-year time horizon, which, at $20bn a year, would represent roughly a quarter of total annual investments in US-based venture-backed start-ups. It did not say whether it would focus on start-ups or later-stage tech companies.

Both SoftBank and Saudi Arabia’s sovereign wealth fund have been stepping up their investments in the tech sector. Earlier this year SoftBank purchased UK chip designer Arm Holdings, in a £24bn deal that marked the biggest acquisition of a European tech company.

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Saudi Arabia’s sovereign wealth fund, known as the Public Investment Fund, has also been working to diversify its holdings with more tech investments that included a $3.5bn injection into Uber, the transportation company, earlier this year.

The PIF is on a mission to support Saudi Arabia’s new 2030 economic plan, which includes reducing reliance on fossil fuels and bolstering the private sector.

Mr Son, SoftBank’s founder and chairman, said that the SoftBank Vision Fund would be “the biggest investor in the technology sector” over the next decade.

The fund will be led by Rajeev Misra, SoftBank’s head of strategic finance.

Earlier, SoftBank tech investments had been largely steered by Nikesh Arora, who was hand-picked to succeed Mr Son at the helm of SoftBank but instead left the company earlier this year. SoftBank Capital has invested in a range of tech groups — Grab, the transportation network, as well as gaming company Zynga and news site BuzzFeed.

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