SoftBank chief pursues $100 billion Gulf AI fund

SoftBank Group chief executive Masayoshi Son is seeking up to $100 billion from Gulf investors for a proposed fund that would acquire businesses and transform their operations using artificial intelligence.

The fundraising discussions are at an early stage, with senior figures in the United Arab Emirates among those approached. No commitments or final agreements have been announced, and there is no assurance that the proposed vehicle will secure its targeted capital.

The plan would mark a further expansion of SoftBank’s AI investment strategy, but with a different emphasis from its existing stakes in technology developers. Rather than concentrating exclusively on companies creating AI systems, the proposed fund would buy operating businesses and deploy advanced software and robotics to improve their performance.

SoftBank’s robotics business, Roze, is expected to feature in the strategy. Its involvement would connect Son’s ambitions in physical AI, where intelligent machines perform tasks in the real world, with a proposed programme of corporate acquisitions and operational changes.

The company has not publicly confirmed the fundraising plan or identified prospective investors. A SoftBank representative declined to comment on the discussions. The reported $100 billion represents an ambition rather than money already raised, making the distinction important for assessing the scale of any eventual investment programme.

The initiative comes as SoftBank commits substantial resources to OpenAI, the developer of ChatGPT. The group has completed a $30 billion follow-on investment in the company, bringing its cumulative investment to approximately $65 billion. That exposure has made OpenAI’s commercial progress and potential stock market listing increasingly significant for SoftBank’s finances.

OpenAI’s timetable for an initial public offering remains uncertain, complicating expectations about when major shareholders could realise part of their investments. Questions surrounding revenue measurements and the enormous expenditure required to develop AI infrastructure have also sharpened investor scrutiny of companies financing the technology.

SoftBank shares fell as much as 7.3 per cent in Tokyo trading on Friday amid concerns about the pace of OpenAI’s revenue growth. The decline illustrated the sensitivity of SoftBank’s market valuation to changing assessments of the AI developer’s prospects, even as Son continues to champion the technology’s long-term potential.

Financing costs represent another consideration. SoftBank raised $11.1 billion through a high-yield bond offering in September, adding debt financing to the resources available for its AI commitments. A separately financed acquisition fund could bring outside capital into its investment programme, although the proposed structure and SoftBank’s own contribution have not been disclosed.

Son has previously secured substantial backing from Gulf sovereign investors. Saudi Arabia’s Public Investment Fund committed $45 billion to SoftBank’s first Vision Fund, while Abu Dhabi’s Mubadala committed $15 billion. Those investments helped establish a vehicle targeting nearly $100 billion when it was launched in 2017.

The first Vision Fund produced sharply contrasting outcomes, including exposure to successful technology businesses and losses associated with troubled investments such as office-sharing company WeWork. That record is relevant to potential backers weighing the risks of another exceptionally large fund under Son’s direction.

Gulf investors are already involved in several major AI ventures. Abu Dhabi-backed MGX is among the partners in Stargate, an American AI infrastructure initiative announced by OpenAI, SoftBank and Oracle. Such relationships demonstrate the region’s role in financing large technology projects, although participation in one initiative does not establish support for another.

The proposed acquisitions would also differ from building data centres or buying minority stakes in AI developers. Their financial results would depend on purchase prices, operating improvements and the costs of installing new technologies, as well as the performance of the acquired businesses.

SoftBank has separately outlined plans for major AI infrastructure investments and has pursued businesses spanning computing, energy and robotics. The company’s exposure includes Arm, the semiconductor technology designer, whose products are widely used in computing systems.

Son has argued that advances in artificial intelligence will require investment on an enormous scale. At a SoftBank conference in July, he projected that global annual spending associated with AI could reach $5 trillion by 2040, a forecast reflecting his expectations rather than an established industry estimate.

Details of the prospective fund’s management, investment period, geographic focus and timetable remain undisclosed. Neither the identities of any committed Gulf investors nor the terms under which they might participate have been made public. The discussions have not yet produced a formally announced fundraising mandate either.