Son's last super IPO

The clock is ticking, and Son can't wait any longer.

The latest news from the Financial Times that SoftBank Group founder and CEO Masayoshi Son will reach a preliminary agreement on the listing plan of ARM with the New York Stock Exchange in the United States, which is expected to be listed on the NASDAQ as early as this fall. At this point, the semiconductor giant officially embarked on the IPO journey.

The outside world's impression of Son is still stuck in the last announcement of goodbye: he will no longer attend SoftBank's earnings conference in the future. At that time, Son frankly chose to turn around and devote himself to the chip company ARM.

The reality is that the hole left by the SoftBank Vision Fund has made Son lose his former spirit, "listed and unlisted stocks are almost wiped out, and the Vision Fund has also been clearly hit." To this end, Son is cashing out his most proud work Ali, which is close to liquidation.

Son's investment career needs a good end, and that hope is ARM.

An infatuated deal seven years ago

Son owns ARM

I still remember that during the earnings call last November, Son announced that he would no longer chair SoftBank's earnings conference and handed over the day-to-day management of the group to CFO Yoshimitsu Goto and other executives. As we all know, as the valuations of the startups it has invested in in recent years have plummeted, SoftBank has been forced into a full-blown defensive phase and has even almost stopped new investments.

At that time, Son confessed: "I am an aggressive person, not a good defensive person, so in the next few years, I want to focus on ARM." In his view, ARM faces the prospect of "explosive growth," and his own dedication to it is not only the best choice for SoftBank's shareholders, but also for humanity as a whole.

There is no doubt that ARM is the company that Son has the most hopes for after Alibaba. As he puts it, "I fell in love with this company before I bought ARM." ”

Fast forward to a summer night in 2016, when Son hosted a banquet at his mansion in Woodside, Calif., and was attended by Simon Seggs, ARM's then-CEO. At the dinner table, Segers discussed ARM's technology with Son, explaining how to turn anything from a table, chair, refrigerator, car, door, or anything else into a "wired object." "Son asked me at the time, how many devices can our technology create without the limitation of money?" Segers was surprised by this way of thinking.

A few days later, Seggs received a call from Tokyo in his office, from Son, who said he would see him and ARM chairman Stuart Chambers immediately. Although Chambers was on vacation on a cruise ship in the Mediterranean, Son did not want to wait any longer, sent a private jet directly to pick up Segers, and persuaded Chambers to dock the cruise ship in Marmaris Harbor.

Straight to the point, as soon as Son saw the two, he directly said that he came today for nothing else, he wanted to buy ARM, and it was 100%. Son then offered a price of $32 billion that ARM's board could hardly refuse, which was 43% higher than ARM's market value at the time, making it the largest deal in the semiconductor industry that year. Hardly anyone could turn down the offer, and unsurprisingly, the deal was closed within two weeks, and Wall Street once again marveled at Son's magnanimity and speed.

Today, ARM accounts for 16% of SoftBank's net asset value, surpassing Alibaba and higher than SoftBank's 13% share of domestic mobile assets. ARM also fought for Son, and the latest quarterly financial report released recently showed that ARM's total revenue in the third fiscal quarter of fiscal 2022 (as of the end of December 2022) was $746 million, a year-on-year increase of 28%; Pre-tax profit in the first three quarters increased 77% year-on-year, a rare growth business for SoftBank in recent times.

At the same time, Son is working to push to improve ARM's business model in order to continue to boost profits ahead of the IPO. ARM has informed customers to increase licensing fees several times, which is seen as one of the company's biggest business strategy changes in decades.

Next, it remains to be seen where Son will lead ARM to.

Huang Jenxun also took a fancy

But the $66 billion sale failed

Interestingly, there is also an episode: ARM was almost sold by Son at one point.

If all goes well, Son will receive a huge sum of $66 billion from Nvidia, but the acquisition of ARM fell through in February last year.

This starts in April 2020. At that time, SoftBank had begun to lose money and had to put ARM on the shelf in search of easing financial pressures. Son invited Goldman Sachs to finalize the buyer, hoping it would pay about 40 billion pounds ($52 billion) for the business, up from 24 billion pounds ($32 billion) paid in 2016.

Subsequently, Goldman Sachs approached Apple, but Apple decided not to buy it. As a result, Goldman Sachs tried to form a consortium of Qualcomm, Samsung and Nvidia to acquire ARM, but in the end, only Nvidia remained at the negotiating table. Later, the tug-of-war between SoftBank and Nvidia entered into a tug-of-war until September of the same year, and it was determined that it would be completed in the form of cash and stock.

Once completed, it will not only be the largest asset sale in SoftBank's history, but also one of the largest acquisitions in the history of the global chip industry. At that time, SoftBank and Nvidia said that the proposed transaction was subject to customary closing conditions, including regulatory approvals in the United Kingdom, China, the European Union and the United States, and expected the transaction to close in about 18 months.

But reality is always full of dramatic changes. Due to the failure of various regulatory authorities to approve it, NVIDIA eventually abandoned its acquisition of ARM. This is undoubtedly a big blow to SoftBank, which is eager to cash out.

SoftBank quickly launched preparations for an independent IPO of ARM, saying it could list ARM on the NASDAQ by March 2023. Subsequently, under the lobbying of the British government, this option was added to the London Exchange. However, the plan could not keep up, and with the resignation of three British government officials involved in the lobbying, SoftBank halted ARM's discussions on listing in the UK next year. Son has previously said that ARM's listing in London is partly due to pressure from the British government.

ARM is now about to take the first step in a U.S. IPO, and the eventual success of this IPO will be crucial for SoftBank to turn around its decline, as the latter's losses have not stopped the bleeding so far. SoftBank earlier reported earnings for the December quarter, showing that the Vision Fund posted a $5.5 billion investment loss and reduced its investment in startups. The loss also resulted in a net loss of $5.9 billion in the October-December quarter, compared with a profit of $220 million a year earlier.

"From the beginning, if it weren't for SoftBank's crisis, ARM was the last asset we wanted to sell. Especially recently, I have realized again how great ARM is and the opportunities for its future growth are huge. Despite Son's reflection last November, it is clear that his ultimate goal is to maximize the return on his world-stirring investment.

After all, the gene of investment maniac is truly engraved in Son's bones.

The rivers and lakes are far away, and life is time for retirement

Looking back, Son's life had ups and downs. Born in a small Japanese village in 1957, after witnessing several family changes in his early years, the young Son Masayoshi vowed to "make a big career and become Japan's first entrepreneur", and at the age of 19, he set a life plan for the next 50 years

Start a business at the age of 20, earn a billion dollars at the age of 30, become the first at the age of 40, earn tens of billions of dollars at the age of 50, and retire at the age of 60.

Today, Son has completed 80% of his life goals, but he is stuck in the last item and cannot retire on time. Perhaps he will also have a hard time getting out, according to previous announcements, Son personally owes SoftBank Group $4.7 billion.

Once upon a time, whether it was Son's "6-minute investment" in Alibaba more than 20 years ago or his desperate bet on Yahoo, it was worth going down in venture history. It is also these two classic cases that made Son soar in value and once became Japan's richest man.

With swelling ambitions, Son ushered in the biggest turning point in his life and established the $100 billion SoftBank Vision Fund, intending to contract global unicorns through venture capital. Over the years, the Vision Fund he has led an impressive way of playing in the primary market, changing the rules of the game with cash, willing to give high valuations, daring to give high valuations, and investing in its opponents without giving bids, which is unrivaled, and this style of play has also won Son Masayoshi's almost famous super unicorn in the world.

In those years, Son often held financial reporting activities, and he also expressed his desire for capital and how science and technology can improve human happiness on stage more than once, sometimes absurd, sometimes poetic, as if painting a historical picture.

But luckily did not favor Son again, and the SoftBank Vision Fund almost stepped on the giant pit of most Internet companies in recent years: Wework, OYO, Doordash, GoTo... It has brewed the biggest hole in the history of venture capital, "listed stocks and unlisted stocks are nearly wiped out".

To this end, Son has publicly reflected on the Vision Fund's "search for unicorns" investment strategy. He admits responsibility for the decision to buy startups at market highs, while promising to cut spending to get back on track. "If we unilaterally pursue our vision, we run the risk of rout, which must be avoided today at all costs." To sum up, Son admitted that he was expensive at that time, and the consequences of high valuation are showing up little by little.

Unexpectedly, the Vision Fund destroyed Son's reputation for half his life. In the fiscal third quarter ended December, SoftBank's Vision Fund had lost 660 billion yen. In order to fill this big hole, Son chose to sell Alibaba's shares again and again in exchange for a glimmer of life.

Just the other day, SoftBank sold about $7.2 billion worth of Alibaba shares in a near-liquidation fashion, and last year, SoftBank sold $29 billion worth of Alibaba shares. After several sell-offs, SoftBank reduced its 35% stake in Alibaba to 3.8% from its peak. Life is full of drama, and Ali has become Son's "lifesaver".

Half a life, Son has already had the intention of retreating, as announced last year that he would fade out of SoftBank's earnings conference. At the age of 66, he vaguely revealed that ARM is probably the last battle, and it is also the battle to turn the tide.

Bless this madman.