Due to current market demands, Japan's SoftBank Group Corp is said to reduce its stake in China's Alibaba Group Holding to book a profit of $34.1 billion.
It is one of the solutions chosen by the investment conglomerate company to increase its cash reserves to weather the widespread market recession.
It is understood that SoftBank will reduce its stake in Alibaba from 23.7% to 14.6% by settling its prepaid futures contract.
Revealing the record, the Chief Executive Officer (CEO) of SoftBank's investment unit, Masayoshi Son, previously reported that the Vision Fund recorded a loss of $50 billion and plans to reduce expenses.
On that basis, SoftBank also announced a plan to reduce its stake in Alibaba, which Son described as a 'solution to the company's future cash flow concerns'.
According to the filing, the estimated profit of ¥4.6 trillion includes ¥2.4 trillion from the revaluation of Alibaba shares and a derivative gain of ¥0.7 trillion will be realized.
Ulas Son, who bought Alibaba for $20 million in 2000, said it would help strengthen the company in weathering a dark market environment.
However, the factor behind the 2/3 fall in Alibaba's value from its highest level since 2020 was not outlined by Son in any filing.
In general, Jack Ma's e-commerce business is under strict pressure from China's technology regulators, including a number of large fines.
Even so, the transaction is clear that SoftBank is not expected to generate additional sales to Alibaba's shares in the market because they are protected in value at the time of the original financing.
