SoftBank, one of the supreme tech investor, is seeking 300 billion Yen ($2.8 billion) in financing from leading Japanese banks. It comes as a surprise as the Japanese Conglomerate already has more than 2 Trillion Yen in hand.
In early 2018, WeWork was valued at $47 billion; however, it is currently valued below $10 billion. According to Nikkei, SoftBank is chunking out big money from banks to support its co-working startup WeWork. If it doesn’t raise money, this nine years old startup is expected to run dry out of cash. Although SoftBank has sufficient money in its yard; however, it considers maintaining a certain level of cash reserves by borrowing the funds to save the company.
SoftBank is seeking loans from Japan’s leading banks, namely Mizuho Financial Group Inc, Mitsubishi UFJ Financial Group Inc, and Sumitomo Mitsui Financial Group Inc, the Reuters published. Some leading Japanese banks are avoiding lending money to Softbank, as they don’t want to take further risks.
The co-working start-up hovered in the headlines after it aborted its IPO and its founder Adam Neumann was ousted from his CEO position, this year. To salvage this situation, in October 2019, SoftBank agreed to throw a lifeline to WeWork, offering $9.5 billion and to take over the company. JP Morgan Chase had lent out a helping hand by offering a $5 billion bailout package to WeWork, but the board of directors chose SoftBank over them.
SoftBank reported its first quarterly losses in the history of 14 years questioning the ability of Masayoshi Son to invest money in tech startups. It recorded a quarterly loss of $6.5 billion.