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Saturday, February 27, 2021

Softbank Reportedly Eyes Billion-Dollar Biotech Bet

Though SoftBank has denied it, rumors are circulating Tuesday that the Japanese telecom/venture capital giant is planning to invest billions of dollars in the biotech sector.

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The booming SPAC trend has amplified curiosity about Softbank’s next big investment idea, especially amid rumors that the company might pursue a SPAC as the vehicle for its second “Vision Fund”, and according to Bloomberg’s sources, SB is looking to focus on biotech, a sector that has already been embraced by Wall Street Bets and others betting on microcap biotech stocks.

Biotech has been a hot sector for the SPAC trend: this past week alone, Foresite Capital’s second SPAC raised $175 million in its IPO, while two other biotech SPACs, European Biotech Acquisition and Frontier Acquisition, filed to raise a total of $300 million in their Nasdaq debuts.

Japan’s aging population offers fertile ground for biotech companies looking to solve myriad problems linked to aging. Softbank has already made a series of equity investments in the sector, including a $312MM stake in Pacific Biosciences of California, an American DNA-sequencing company whose stock has risen almost 9x over the past year. 

And now, the Japanese firm is reportedly planning to spend billions investing in public biotech companies, according to Bloomberg and its sources. The trades will reportedly be housed in the company’s SB Northstar, which houses some of the company’s Nasdaq “whale” trades. One Softbank rep told Bloomberg that the report about Northstar’s role were inaccurate.

“This is misleading and inaccurate,” said a SoftBank spokesperson.

“SB Northstar continues to consider investment opportunities across the entire technology spectrum and is not specifically focused on one particular sector.”

Softbank has already made a number of investments in health-care startups, primarily through its Vision Fund, such as 10x Genomics and Roivant Sciences. The Japanese investor also has a $298MM equity stake in Canadian antibody-drug discovery platform AbCellera Biologics, a small investment in 4D Molecular Therapeutics, and is planning a further $900MM convertible debt investment in a company called PacBio, according to Bloomberg.

Still, analysts and investors have been speculating about whether founder Masayoshi Son will spend more than $80B in assets, after the Softbank CEO last year unveiled plans to sell off $43B in assets and buy back 2.5 trillion yen of its own stock. Shares in the Japanese billionaire’s company have since surged, reaching the highest close since the company went public in 1994, and flying past a long-standing record two decades ago. This has helped Softbank’s post-WeWork turnaround, and will continue to enable Masa Son to trawl about for a new strategy.

Zerohedge

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