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
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
