Key facts
- SoftBank Group is in renewed talks for a $10 billion loan secured by its stake in OpenAI.
- The company is offering guarantees to lenders to address concerns about the valuation of private company shares.
- Goldman Sachs, JPMorgan Chase, and Mizuho Financial Group are expected to be part of the lending consortium.
- The loan has a two-year term with a one-year extension option and an interest rate of approximately 7.88%.
SoftBank Group has re-entered negotiations with a consortium of lenders for a $10 billion loan, using its stake in artificial intelligence firm OpenAI as collateral. Initial attempts to secure the financing were hampered by difficulties in valuing the private company's shares.
To assuage lender concerns, SoftBank is reportedly offering a guarantee, meaning the company would be responsible for repaying the loan if the value of the pledged OpenAI shares declines significantly. The lending group is anticipated to include major financial institutions such as Goldman Sachs, JPMorgan Chase, and Mizuho Financial Group.
This new loan facility comes on top of a $40 billion bridge loan SoftBank secured in March, also involving several of the same banks, which was earmarked for further investment in OpenAI and general corporate purposes. The total commitment from SoftBank to OpenAI is expected to reach approximately $64.6 billion for an estimated 13% stake, which is notionally valued at around $110 billion based on OpenAI's latest funding round valuation of $852 billion.
The proposed loan has a two-year term with a one-year extension option, and the interest rate is set at SOFR plus 425 basis points, translating to roughly 7.88% at current levels. This move highlights SoftBank's strategy of leveraging its AI assets to fund further investments, a recursive approach that carries inherent risks, particularly given the illiquidity of private company shares compared to publicly traded ones.