SoftBank Seeks $7.5 Billion Loan Secured by Planned Arm Sale

(Bloomberg) — SoftBank Group Corp. is in talks with banks for a loan of about $7.5 billion tied to the Japanese conglomerate’s planned sale of Arm Ltd. to Nvidia Corp., according to people familiar with the matter.

Mizuho Bank Ltd. is coordinating the deal, said the people, who aren’t authorized to speak publicly and asked not to be identified. The proceeds would provide investment funds for SoftBank’s Vision Fund operation, and the collateral would be receivables from the cash portion of the proposed Arm sale, the people said.

A loan of that size would be among SoftBank’s biggest in dollars, following a record facility recently. The company increased a margin loan backed by shares in Alibaba Group Holding Ltd. to $10 billion, people familiar said earlier this month. It also priced the biggest Japanese corporate bond deal of the year last week, when it sold 405 billion yen ($3.7 billion) of debt securities.

Nvidia agreed in September to buy SoftBank’s chip division Arm for $40 billion. The deal is awaiting regulatory approval. Last week, Nvidia’s chief executive officer Jensen Huang said he is still confident that regulators will green-light the acquisition.

But the semiconductor industry’s biggest-ever acquisition faces headwinds: Chinese technology companies including Huawei Technologies Co. are lobbying their government against the transaction. The U.K., where Arm is based, said it plans to investigate the implications of the deal on national security grounds.

Read more about regulatory background for the deal here

A Tokyo-based spokesperson for SoftBank declined to comment. A spokesperson for Mizuho said the bank couldn’t comment about individual deals.

Some of the banks that were approached to join the deal expressed concern that the Arm sale would not go through, the people familiar said.

The scrutiny on the deal stems in large part from concerns that it could alter something that’s been at the heart of Arm’s success: its neutrality in the chipmaking industry. Its architecture is used by the vast majority of mobile devices, underpinning Apple Inc.’s in-house M1 chips and Samsung Electronics Co.’s Exynos, among others. Nvidia’s potential acquisition has raised concerns because it competes with Arm customers such as Qualcomm Inc., Intel Corp. and Advanced Micro Devices Inc.

Nvidia’s Huang said from the start he would preserve Arm’s neutral business model, arguing Nvidia is spending a lot of money for the acquisition and has no incentive to do anything that would cause clients to walk away.

SoftBank’s recent success with its Vision Fund could burnish the appeal for some lenders. The investment arm went from being the source of the biggest loss in SoftBank’s history a year ago to the main driver of earnings, with a 2.3 trillion yen profit in the March quarter.

A rally in tech shares boosted Vision Fund profits to three consecutive records, raising the value of holdings in the likes of Uber Technologies Inc. and paving the way for public listings from startups such as Coupang Inc. and DoorDash Inc.

(Adds further background)

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