SoftBank Group Corp. has reportedly completed the $40 billion investment in OpenAI Group PBC that it announced in March.
Sources told CNBC today that the Japanese conglomerate finalized the deal last week. It did so by transferring $22.5 billion to OpenAI, which raised the remaining $17.5 million in two earlier tranches. SoftBank disbursed $7.5 billion to the company last month, while the rest was provided by an investor consortium in April.
OpenAI will use some of the funds to finance its Starlink data center initiative. The project, which the company launched at the start of the year, aims to deploy 10 gigawatts of computing capacity in the U.S. by 2029. The effort is supported by Oracle Corp. and SB Energy, a SoftBank unit that develops renewable energy installations.
SoftBank’s newly completed $22.5 billion cash infusion was contingent on a major update to OpenAI’s organizational structure. Until a few months ago, the ChatGPT developer operated as a nonprofit with a for-profit arm. The organizational overhaul turned the for-profit arm into a standalone public benefit corporation.
SoftBank reportedly sold some of the other assets in its investment portfolio to finance the funding round. The company offloaded a $5.8 billion stake in Nvidia Corp. and $4.8 billion worth of T-Mobile US Inc. stock. Additionally, it took out a $11.5 billion loan against its Arm Holdings plc shares.
Nikkei Asia reported that SoftBank now has an approximately 11% stake in OpenAI. That makes it the AI provider’s second largest investor behind Microsoft Corp., which owns 27.5% of the company. The tech giant had an even larger 32% stake before the recent update to OpenAI’s organizational structure.
SoftBank could potentially realize a significant return on its investment.
When the company signed off on OpenAI’s $40 billion funding round in March, the AI provider was valued at $300 billion. A recent $6.6 billion secondary sale boosted that number to $500 billion. Earlier this month, the Wall Street Journal reported that OpenAI is negotiating a new funding round at an even higher valuation.
Sources told Reuters that the ChatGPT developer may follow up the raise with an initial public offering. The listing, which could reportedly take place in 2027, may give SoftBank an opportunity to sell some of its shares at a significant premium. OpenAI is expected to sell at least $60 billion worth of stock at an up to $1 trillion valuation.
SoftBank’s artificial intelligence strategy also extends to other parts of the market. On Monday, it inked a $4.04 billion deal to acquire DigitalBridge Group Inc., a private equity firm active in the technology sector. One of its portfolio companies, Vantage Data Centers Management Company LLC, is helping OpenAI build a Stargate data center campus in Wisconsin.
Photo: Focal Foto/Flickr
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