SoftBank to sell part of stake in China's Alibaba for $7.9 bn

Japanese mobile carrier SoftBank will sell part its stake to pay down a whopping debt load

Japanese mobile carrier SoftBank today said it will sell at least $7.9 billion of its stake in Chinese e-commerce giant Alibaba, as it looks to pay down a whopping debt load.

The move will reduce SoftBank's 32.2% holding in the Chinese company to about 28% with the sale, it said, adding that proceeds would be earmarked to pay down debt.

SoftBank said in a statement it has "approved of a series of capital raising transactions, which involve monetising a portion of the shares of Alibaba".

The Japanese mobile carrier, led by charismatic businessman Masayoshi Son, first made its investment in Alibaba in 2000.

"This investment has been phenomenally successful and, over the past 16 years, we have built a close relationship, working together on many exciting projects," Son said in the statement, adding that the pair would continue to work together.

Led by Son, SoftBank launched an acquisition streak that saw it pick up an assortment of firms, including its $16 billion purchase of US-based mobile giant Sprint.

But the buying spree has put pressure on SoftBank's finances, and the firm also announced earlier this year it would buy back more than 14% of its stock at a cost of about 500 billion yen.

Son and Alibaba's executive chairman Jack Ma will each remain on the board of the other's firms, the statement said.

"Under the leadership of Masayoshi Son, SoftBank has been a highly valued, long-time partner of Alibaba for more than 16 years, and we look forward to continuing our strong partnership together," Ma said in a separate statement.

"As SoftBank looks to strengthen its own balance sheet, Alibaba determined that it was the best use of our capital to re-invest in our own business through an efficient buyback of a large number of shares in our own company that is accretive to our stockholders."

SoftBank said Alibaba itself would buy back at least $2.0 billion worth of the shares it is selling.

SoftBank has seen its profits boosted thanks to Alibaba's record $25 billion market debut in 2014 in New York.

Today's announcement came after the Chinese online giant disclosed last week that US securities regulators were probing its accounting for possible violations of US securities laws.

SoftBank shares rose more than two percent shortly after the opening bell today.

Alibaba's US-listed shares declined 3.1 per cent yesterday after the announcement of SoftBank's planned share sale.