A loan backed by OpenAI shares
SoftBank Group has borrowed $10 billion from a group of banks using its stake in OpenAI as collateral. The company announced the loan on Thursday alongside its second-quarter earnings. The move adds to SoftBank's debt as it doubles down on artificial intelligence.
The two-year loan was arranged by Goldman Sachs, JPMorgan Chase, Mizuho Securities, Apollo Global and Sumitomo Mitsui Banking. SoftBank plans to draw down the money this month. The agreement includes provisions that require SoftBank to add cash or repay early if the value of OpenAI's preferred shares falls sharply.
Funding a bigger OpenAI bet
The cash will help SoftBank pay another $10 billion for OpenAI shares by October. That payment is the final part of a $30 billion investment announced earlier this year. By October, SoftBank will have invested about $64 billion in OpenAI and hold a roughly 13% stake.
The loan follows a $40 billion bridge loan that SoftBank arranged for its OpenAI investments. That facility added 21 new lenders during syndication last month. Investors are watching SoftBank's growing debt levels closely, along with the uncertain returns on its biggest investments.
Son's AI empire
Chief Executive Masayoshi Son has made SoftBank one of the largest backers of OpenAI. The company is building AI data centers, investing in AI-powered robotics, and setting up its own “neocloud” business that rents AI computing power to other companies, similar to CoreWeave.
SoftBank's single-company focus is different from other AI investors, who have spread their bets across several competing model makers. OpenAI filed confidentially for a U.S. initial public offering in June, which could make SoftBank's stake easier for lenders to value and, eventually, to sell.
If OpenAI succeeds, the bet could pay off. If it stumbles, the ripple effects would reach far beyond SoftBank's balance sheet.