Investment

Vision Fund chief’s hedge fund plan risks SoftBank tension – Financial Times

Published

5 years ago

February 16, 2020

The head of SoftBank’s $100bn Vision Fund has lined up billions of dollars of outside investment for a new hedge fund-style vehicle, in a move that threatens to escalate tensions at the world’s biggest tech investor.

Rajeev Misra, who oversees the Vision Fund, has been pushing to build a multibillion dollar fund to pursue complex bets on publicly traded companies, according to multiple people with direct knowledge of the matter.

Mr Misra’s plans have found support from Abu Dhabi’s state fund Mubadala, which in turn has helped recruit interest from the government of Kazakhstan, one person involved in the talks said. Together, the two state funds are considering putting up as much as $4bn for the vehicle, the person added.

Such a move would mark a sharp deviation from the vision of SoftBank’s founder Masayoshi Son, who created the telecoms company’s investment arm to take stakes in private, technology-focused start-ups and profit from scaling them up.

The plans also threaten to further inflame tensions within SoftBank over the direction of its investments business, following the Vision Fund’s disastrous bets in companies such as office sharing group WeWork and dog-walking app Wag.

Those failed bets have forced Mr Son to scale back ambitions for a second $108bn Vision Fund, pushed profits at SoftBank down 99 per cent in the third quarter, and led some to question how profitable the original fund will ever be.

A person close to Mubadala confirmed it was “exploring” a co-investment with Kazakhstan in the hedge fund-style fund, the size of which would initially be less than $2bn. Mubadala, which is one of two big outside investors in the Vision Fund, declined to comment.

The fund is set to be based in Abu Dhabi and would be managed by Akshay Naheta, a former hedge fund manager and one of Mr Misra’s closest allies at SoftBank’s investments unit, three of these people said.

Mr Naheta was the driving force behind a lucrative bet on German payments company Wirecard last year, made through the SoftBank Strategic Investment Fund, a specially created vehicle. That fund will be used for the new trading strategy.

Some of the people with knowledge of the matter said that SoftBank had been trying to muffle attempts by Mr Misra, a former Deutsche Bank debt trader, to announce the plans.

A person with knowledge of Mr Son’s thinking said that he has been against the idea because it goes against his technology investment strategy.

A SoftBank spokesperson denied any misalignment between Mr Son and Mr Misra on what it described as a “public equities fund”.

Mr Naheta, who worked with Mr Misra at Deutsche Bank and is a managing director at SoftBank’s investment arm, was the architect of the €900m investment in Wirecard. The deal was structured through a series of derivatives and benefitted from using SoftBank’s name to add credibility to the arrangement.

At the time, the investment provided an important vote of confidence in the payments company at a time when it faced serious questions over its accounting.

The Wall Street Journal later revealed that SoftBank had never put any money into the deal, although Mubadala and certain SoftBank employees had — including Mr Naheta and Mr Misra — and profited handsomely.

Mr Naheta was also involved in an earlier successful bet made directly by the Vision Fund on publicly traded shares in chipmaker Nvidia.

Mr Naheta and Mr Misra worked together as traders at Deutsche Bank more than a decade ago, when the bank was known for its swashbuckling culture. Before joining SoftBank’s investment arm as a managing director, Mr Naheta ran a London-based hedge fund called Knight Assets.

Additional reporting by Kana Inagaki, Robert Smith and Leo Lewis

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Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

21 hours ago

November 6, 2024

Anne Joseph

NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

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Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

3 weeks ago

October 16, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

4 weeks ago

October 11, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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