Rajeev Misra, chief executive of SoftBank's Vision Fund
Credit: David Paul Morris /Bloomberg
Another investment manager whose star has been rising is 39-year-old Akshay Naheta. Naheta joined the Vision Fund in 2017 and was the brains behind a $1bn trade in WireCard, the fallen German payments business left broken by a fraud scandal. SoftBank was left unblemished by the fallout at Wirecard, as it had effectively funded the investment without its money.
Until 2011 he was also at Deutsche, rising quickly as a proprietary trader, before setting up his own firm focused on “arbitrage and value investing”. Naheta recently moved from the Vision Fund to join SoftBank Group to focus on investments, according to his LinkedIn.
They are not the only City movers and shakers who are working with SoftBank’s billions. Colin Fan, former head of Deutsche’s trading business, Munish Varma, a former trader and Ioannis “John” Pipplis, former global head of fixed income.
A separate firm, Centricus, founded by ex-Deutsche bankers, was also involved in fundraising for SoftBank’s $100bn Vision Fund. “There is a lot of overlap and camaraderie between them,” says one source.
The last two decades of the German bank’s history shed some light on how SoftBank has become a new home for such high-octane deal making.
Headquartered in its glistening twin towers in Frankfurt, the 150-year-old bank was known for building one of Europe’s biggest investment banking teams in the City and the US at the expense of its retail banking arm. A 2004 Economist headline dubbed it “a giant hedge fund”. It became known as a major purveyor of collateralised debt in the run up to the financial crisis.
In the aftermath, its investment team has been in decline and the bank has undergone multiple restructurings. Many of its biggest dealmakers have since jumped ship and some have ended up with SoftBank.
While the huge bet on technology stocks appears to have paid off for Masa Son, it has spooked investors.
SoftBank used a financial tool called a “call option”. It used $4bn to make down payments on $30bn worth of shares to buy them at an agreed price, effectively a down payment. Since the stocks surged above the agreed prices, it will be able to turn a profit.
Value of Softbank investments
Neil Campling, analyst at equity research firm Mirabaud Securities, claims that although the strategy may have brought short-term financial gains, it will have thrown investors who had felt SoftBank was going in a different direction. SoftBank shares fell more than 7pc, wiping around $9bn off its value.
In an earnings briefing in August, Son had given no signal of intent to pursue an “aggressive strategy more suited to a hedge fund”, Campling notes. Instead, he announced the move into asset management as a means of diversifying the firm’s holdings and to manage excess cash.
“The August conference call even went as far as to call ‘defensive posture’ and more prudent asset management as the new SoftBank Business themes. There wasn’t anything about this strategy that appears defensive or prudent,” Campling says.
Chris Beauchamp, chief market analyst at IG, a trading service, sees the current push as an opportunity to make quick returns in the midst of a market rally that has seen tech stocks soar, helping cover ground for losses incurred from failed bets over the last year.
“You’ve got this influx of people who are more known for this hedge fund strategy than a long slow investment case,” he says.
“It’s a perfectly valid strategy if you know how to execute it and of course they do know what they’re doing. But it does always pose a risk because it can backfire."
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