SoftBank Investment Advisers, which manages two Vision Funds, is exploring launching a private credit strategy that provides debt or debt-like structured financing for late-stage tech startups, people familiar with the matter told Reuters.
The fund aims to offer liquidity options to tech startups, including some of SoftBank's own portfolios, amid a slow venture funding environment and a weak market for IPO exits. It targets returns in the mid-teens, one of the sources added.
The plan, which was still in its early stage and could change, was first reported by Bloomberg News earlier on Monday. SoftBank declined a Reuters request to comment.
In recent weeks, several major investment and private equity firms have stepped in to fill the chasm created in tech funding, especially debt financing, by the collapse of Silicon Valley Bank in March.
Japan's SoftBank Group Corp, a prolific investor in high-growth technology firms, will be able to tap the rapidly growing private credit market and provide capital for pre-IPO companies that need to survive for longer in a much harder environment to raise new capital.
Earlier this month, the company posted a sharply narrower annual loss after a capital raise using its stake in Alibaba Group Holding Ltd helped cushion investment loss at its Vision Fund investing arm, which has been hammered by the underperformance of major investments such as office-sharing firm WeWork Inc and ride-hailing giant Didi Global Inc.
Vision Funds' portfolio includes neobank Chime and Revolut. SoftBank is nearing the end of deploying the $56 billion capital in Vision Fund 2.
Chipmaker Arm Ltd, owned by SoftBank Group, last month filed confidentially for a US stock market listing, setting the stage for one of the biggest tech IPOs in the US this year.