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Shares in Alibaba, one of the most valuable assets in SoftBank’s portfolio, tumbled as much as 5.1% in Hong Kong following the report before paring the loss to 3.3%. SoftBank shares traded unchanged, tracking a broader market.
The forward sales, which FT analysed based on filings sent to the U.S. Securities and Exchange Commission, will eventually cut SoftBank’s stake in the e-commerce group to just 3.8%, the British newspaper reported on Wednesday.
The Japanese group, led by billionaire founder Masayoshi Son, has sold about $7.2 billion worth of Alibaba shares this year through prepaid forward contracts, the newspaper said.
SoftBank has been seeking ways to monetise its stake in Alibaba, which the Japanese conglomerate bought into more than two decades ago with just $20 million spending.
SoftBank told FT the Alibaba transactions reflected its shift to “defensive mode” to address a more uncertain business environment, and said the company would provide details in its quarterly earnings results announcement in May.
Neither SoftBank nor Alibaba responded to Reuters’ requests for comment. Alibaba’s U.S.-listed shares dropped 1.3% in after-market trade.
SoftBank booked a gain of $34 billion last year by cutting its stake in Alibaba to 14.6% from 23.7%, as the firm sought to shore up its cash reserves amid steep losses incurred by its Vision Fund.
At the time, it also used prepaid forward contracts, a type of derivative contract that allows an investor to hedge risk associated with an equity investment in a company.
Alibaba has lost more than two-thirds of its value from highs touched in late 2020, hit by increased regulatory action in the technology sector that included a hefty fine on Alibaba and scrutiny of founder Jack Ma’s business empire.
