The Real Deal New York

Softbank shares plummet amid concerns over Saudi ties

“You might find a lot of investors not willing to take their money”
October 15, 2018 04:00PM

Masayoshi Son and Mohammed bin Salman in New York (Credit: Getty Images)

SoftBank Group’s shares sank Monday amid investor concerns that the firm’s ties to the Saudi Arabian government could hurt it in the wake of journalist Jamal Khashoggi’s disappearance.

Saudi Arabia is the biggest investor in Softbank’s $100 billion Vision Fund, which owns stakes in WeWork, brokerage Compass, property insurer Lemonade, and construction company Katerra, among other firms.

Khashoggi, a well-known critic of Saudi Arabia’s regime, disappeared after walking into the Saudi consulate on Oct. 2. Turkey’s government claims he was murdered by Saudi authorities and then dismembered. In response, executives at some major U.S. companies announced they would no longer attend the “Davos in the Desert” conference hosted by the country.

SoftBank’s shares on Monday saw the steepest price drop in two years, Bloomberg reported. Some analysts worry that SoftBank’s Saudi ties could make it less popular with startups.

“If the Saudis are implicated in the murder, you might find a lot of investors not willing to take their money,” Sanford Bernstein analyst Chris Lane told Bloomberg. “This could start to freeze the Vision fund out of future deals. This also potentially puts Vision Fund II at risk.”

After committing $45 billion to the Vision Fund, Saudi Arabia’s crown prince Mohammed bin Salman also pledged to invest billions in SoftBank’s next venture capital fund.

Last week, the Wall Street Journal reported that SoftBank is in talks to buy a majority stake in WeWork, which could be worth up to $20 billion. [Bloomberg] — Konrad Putzier