Sell all Nvidia shares, mortgage Arm for leverage! SoftBank “goes all in” on OpenAI, aiming to secure funds by the end of the year.

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SoftBank Group and its founder Masayoshi Son are aggressively raising funds through large-scale asset disposals and debt financing to fulfill their massive investment commitment to OpenAI.

On December 19, according to Reuters, sources revealed that SoftBank is racing against time to complete its outstanding $22.5 billion financing commitment to OpenAI by the end of this year. To raise the required funds, Masayoshi Son has taken a series of aggressive measures, including selling all of SoftBank's $5.8 billion stake in AI chip leader Nvidia, and offloading $4.8 billion worth of T-Mobile US shares.

In addition, according to reports, sources mentioned that SoftBank might utilize undrawn margin loans obtained by pledging its shares in chip design company Arm Holdings.

Analysts believe that this financing sprint not only highlights SoftBank's ambition in the AI field, but also provides the market with a window to observe how top global dealmakers face enormous capital pressures in the trillion-dollar AI infrastructure race.

Although the contract stipulates that the funds only need to be in place by the end of 2025, SoftBank internally is speeding up this process. In addition to asset monetization, Masayoshi Son has significantly slowed down other Vision Fund transactions, and now any deal above $50 million requires his explicit approval.

Full-scale Asset Liquidation and Financing Channels

To ensure the "big bet" funding for OpenAI is in place, SoftBank is operating simultaneously on multiple fronts, leveraging cash, listed stocks, and debt instruments from its balance sheet for financing.

Regarding specific asset disposals, besides clearing out Nvidia and trimming T-Mobile US holdings, SoftBank has also reduced its employee headcount to control costs.

According to reports, three sources revealed that Vision Fund investment managers are being instructed to shift their focus entirely to the OpenAI deal.

In terms of potential liquidity sources, SoftBank plans to bring its payment app PayPay to the public market. According to sources, PayPay’s initial public offering (IPO) was originally expected to take place this month but was delayed due to a 43-day U.S. government shutdown.

Currently, PayPay's market debut is expected in the first quarter of next year, with fundraising possibly exceeding $20 billion. In addition, SoftBank seeks to cash out part of its stake as Chinese ride-hailing giant Didi Global plans to go public in Hong Kong.

Pledging Arm: A Crucial Financing Lever

SoftBank’s main cash pool currently comes from margin loans obtained by pledging its Arm Holdings shares.

According to reports, sources revealed that SoftBank has recently increased the amount of this margin loan by $6.5 billion, bringing its total undrawn financing capacity to $11.5 billion.

Since its IPO, Arm’s share price has tripled, giving SoftBank substantial additional collateral space and enabling it to access liquidity by expanding borrowing capacity without directly selling this core asset.

OpenAI’s Thirst for Capital

The key driver behind Masayoshi Son’s rush to inject capital using various financing mechanisms is the astonishing growth in OpenAI’s valuation.

In April this year, SoftBank secured an investment agreement with OpenAI at a $300 billion valuation, committing a total investment of $30 billion, of which $10 billion was paid that month. The payment of the remainder is contingent on OpenAI transforming into a for-profit company by year-end.

According to reports, sources revealed that since the agreement was signed in April, OpenAI’s valuation has soared. The company is currently in talks with investors including Amazon, with its valuation possibly approaching $900 billion. This means that once the deal is completed, SoftBank will immediately reap enormous gains on paper.

For OpenAI, this new funding is essential. As competition from Alphabet’s Google intensifies, OpenAI is facing surging costs for training and running AI models.

OpenAI CEO Sam Altman stated in October that OpenAI aims to spend $1.4 trillion to build 30GW of computing capacity, and eventually hopes to add 1GW of computational power each week.

Given that the capital cost per GW currently exceeds $40 billion, the funding needs for this goal are immense.

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