With Masayoshi Son at its helm, SoftBank has earned a reputation for pursuing diverse, ambitious ventures and aggressively challenging Silicon Valley.
SoftBank has continued to expand into new territories. It recently entered talks to buy a stake in Swiss Re (FRA: SR9). The likely 10% stake is lower than previously anticipated, which helped drive a 3.2% dip in Swiss Re shares. SoftBank was possibly attracted by Swiss Re's undervalued stock, cash generation, and research abilities, and may plan to offer Swiss Re insurance products to other companies in which it has invested, including Nvidia, WeWork, Uber, and dog-walking app Wag. This is consistent with SoftBank's general strategy of creating a web of companies that SoftBank either influences or controls outright. As an example, SoftBank bought a $450 million interest in Compass, a real estate brokerage site, which now rents WeWork office space.
SoftBank has mulled entering the reinsurance market in a bid to diversify its already varied as part of its $100 billion 'Vision Fund,' a fund that, while controlled by SoftBank, includes investments from Foxconn (TPE: 2317), Qualcomm (NASDAQ: QCOM), Apple (NASDAQ: AAPL), Saudi Arabia's Public Investment Fund, and others. Swiss Re will not issue new shares for a possible investment; SoftBank will likely buy shares on the open market.
SoftBank has long sought to distinguish itself in the world of tech, but now it's also taking on Wall Street. SoftBank has also tried to break into private equity, an area long dominated by Wall Street titans like Carlyle, the Blackstone Group, and Kohlberg Kravis Roberts.
In December 2017, SoftBank completed its purchase of Fortress investment, a midsize asset manager, for $3.3 billion. Fortress provided a preexisting structure that SoftBank has used to expand its investment arm, which previously consisted solely of a small pool of analysts. While not yet fully established, SoftBank plans to combine Fortress and its technology fund to create an asset management firm that might be able to draw business away from major asset managers.
Rajeev Misra, a former Deutsche Bank (NYSE: DB) executive, will lead this new company. In a recent interview, Misra placed the combined assets of the Vision Fund and Fortress at $140 billion, and said he hoped to double that value in the next five years. This value puts SoftBank in competition with Kohlberg Kravis Roberts, which oversees $168 billion in assets alone. Misra's vision is to become "one of the largest managers of alternative assets in the world."
Some are skeptical of SoftBank's unusual - and speedy - approach. More established firms became institutionalized over decades. "It takes a lot of work to build one of these organizations," said Josh Lerner, a private equity specialist. "The best of them have been built through a careful process of balancing controls that limit risk with maintaining incentives and the entrepreneurial spirit of the firm. Just the ability to raise money is not a guarantee of success."