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SoftBank Group confirms stake cut in Alibaba

Jovi Ho
Jovi Ho • 4 min read
SoftBank Group confirms stake cut in Alibaba
SoftBank will record a gain on sale of investment securities of 1,259.2 billion yen ($11.43 billion) as extraordinary income in its non-consolidated financial results for the fiscal year ending March 31. Photo: Bloomberg
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SoftBank Group confirmed on Jan 25 that its wholly-owned subsidiary Skybridge had reduced its stake in Alibaba Group Holding, making the latter’s co-founders its largest shareholders once more.

SoftBank will record a gain on sale of investment securities of 1,259.2 billion yen ($11.43 billion) as extraordinary income in its non-consolidated financial results for the fiscal year ending March 31. 

According to a press release by SoftBank, this includes a gain of 700.6 billion yen related to intra-group prepaid forward contracts that have been settled to date.

Several of SoftBank’s wholly-owned subsidiaries have been raising funds using Alibaba shares by entering into prepaid forward contracts with several financial institutions, says the Japanese multinational investment holding company.

Skybridge entered into prepaid forward contracts with financial institutions in April 2020, using 512.3 million Alibaba shares. These shares were borrowed from SoftBank through a share loan agreement. Concurrently, SoftBank and Skybridge entered into prepaid forward contracts.

Between October 2021 and this month, Skybridge settled all of the prepaid forward contracts in several tranches, all in physical form. Upon the final settlement in January, SoftBank transferred 512.3 million Alibaba shares to Skybridge, which Skybridge then used to settle the intra-group share loan agreement. 

See also: Jack Ma buys Alibaba stock to show support for struggling empire

The statement adds that neither SoftBank, Skybridge nor the financial institutions have bought or sold any new Alibaba shares in the market, nor do they plan to do so in the future.

SoftBank will not recognise any gain on sale of investment securities in its full-year financial results as these are intra-group transactions. “The gain or loss on each prepaid forward contract with financial institutions is recognised at the time of settlement.”

Co-founders emerge as largest shareholders

See also: Lazada CEO James Dong appointed acting CEO of Daraz in Alibaba's latest reshuffle

Alibaba Group Holding’s billionaire co-founder Jack Ma bought about US$50 million ($66.98 million) of stock last quarter, reported The New York Times on Jan 23, citing people familiar with the matter. Ma retired as Alibaba’s executive chairman in 2019. 

Chairman Joseph Tsai — Ma’s longtime confidante and co-founder of Alibaba — also separately bought about US$151.7 million of shares in his first such purchase since 2017.

With the purchases, Ma and Tsai have emerged as the two largest shareholders of the e-commerce giant they founded in 1999. Ma’s stake in Alibaba was last reported at 4.3% at the end of 2021, while Tsai owned 1.4% of the company last year, according to Alibaba’s annual report. 

Alibaba Group Holding shares jumped the following day. China’s e-commerce pioneer gained as much as 6.7% in Hong Kong, after climbing 8% in New York.

Ma’s surprise move has been interpreted as a much-needed boost for a company weathering internal turmoil and a stock market rout. 

While Alibaba’s stock peaked during the 2020 pandemic year, it lost some 43% of its value over the past year, as it gradually lost market share to PDD Holdings Inc and underwent a management reshuffle.

Ma disappeared from public view after criticising the Chinese financial system in a speech delivered at a high-profile Shanghai forum in October 2020, returning to China only in March 2023.

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Before scooping up more shares last quarter, Ma had gradually sold down his stake in Alibaba, opting to focus on his own projects, including philanthropy. In November 2023, his family trust disclosed plans to unload 10 million shares, worth some US$871 million, in regulatory filings. 

Management, staff reshuffles

Closer to the region, Alibaba made news at the start of the year with a retrenchment exercise at e-commerce subsidiary Lazada, which cut an undisclosed number of staff across its six markets in Southeast Asia. 

Earlier this week, Lazada Group’s CEO James Dong was appointed acting CEO of Daraz, Alibaba’s South Asian e-commerce platform — marking the latest development in rapid management reshuffles across the group. 

The appointment, effective Jan 24, adds to Dong’s existing responsibilities. Dong became Lazada’s CEO in 2022, moving from his prior role as head of Thailand operations. 

Daraz, a Pakistani firm founded in 2012, was acquired by Alibaba in 2018. It also operates in Bangladesh, Nepal and Sri Lanka. In February 2023, the company cut 11% of its roles to prepare for the “current market reality”, said former CEO Bjarke Mikkelsen in a letter to employees.

Wwith additional reporting by Samantha Chiew and Nicole Lim 

Read more about how The Edge Singapore broke the news of layoffs at Lazada:

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