SoftBank proceeds from Alibaba selldown rise to $10 billion

SoftBank Group increased the amount of money it will raise from selling down its stake in China's Alibaba Group to $10 billion, after exercising an option to dispose of more shares through a trust.

That's up from a previous figure of $8.9 billion, which was itself raised by $1 billion from an initial announcement earlier this week. SoftBank is selling shares in China's largest e-commerce company for the first time since first buying in about 16 years ago, as it looks for new investments in promising startups and strengthens a balance sheet that carries a debt load of 11.9 trillion yen ($112 billion).

The cash infusion will allow SoftBank founder Masayoshi Son to whittle down that debt and grant his company the flexibility to pursue acquisitions, offsetting the burden imposed by a costly but underperforming investment in unprofitable US wireless carrier Sprint.

"The balance sheet of Softbank has deteriorated since the purchase of Sprint," said Hideki Yasuda, an analyst at Ace Research Institute in Tokyo. "Even if Son wants to do a huge M&A deal, he won't be able to until he's done with Sprint's turnaround."

"Also, it wouldn't be a good idea to divert resources to somewhere else." SoftBank is raising $10 billion selling shares through a trust as well as offloading stock to Alibaba and other investors.

An option to buy up to an additional 20 per cent, or $1.1 billion, of trust securities exchangeable for Alibaba shares has been exercised in full, the Japanese company said in a statement. That brings the total raised via the sale of such securities to $6.6 billion.