Japanese tech giant SoftBank Group took out an $8 billion loan using its stake in online giant Alibaba as collateral, Bloomberg reported, ahead of a planned IPO for its domestic telecoms unit later this year.
The margin loan, which will not increase the company’s debt, is reportedly the largest of its type ever, and SoftBank was helped by at least 10 banks in securing it, including Morgan Stanley, Citigroup and Goldman Sachs.
A margin loan means SoftBank will need to pay up if the value of Alibaba, in which it has a 29 per cent stake, declines. If it is unable to do so, banks can be sell some of the collateral.
Eariler this year SoftBank confirmed plans to list part of its Japanese telecoms business in order to offer some separation from its other investment activities, and is looking to raise up to $18 billion.
But the unit has already been used as collateral for earlier debt, the report said, which could cause an obstacle for the IPO. SoftBank will need to prove the independence of the unit by removing the debt guarantees.