SoftBank Group’s “appetite” for OpenAI is becoming costly. The investment giant's response: borrow more and reduce its holdings more. The Tokyo-based company, run by billionaire Masayoshi Son, said on Thursday it had added $27 billion in debt, including subsidiaries, in the fourth quarter of last year. In addition to the previously announced sale of Nvidia shares to cash out US$5.8 billion, SoftBank also reduced its holdings in T-Mobile, cashing out more than US$3.5 billion.

The funding helped SoftBank inject $22.5 billion into OpenAI in December, bringing its total investment in the company to $34.6 billion. But SoftBank still needs more money.

According to relevant media reports at the end of January, SoftBank is negotiating with OpenAI for an additional investment of up to US$30 billion. The ChatGPT developer is burning through cash quickly to stay ahead of the competition.

SoftBank also reported a profit of $1.6 billion in the three months to December, largely due to an increase in the valuation of its early investment in OpenAI.

SoftBank's massive investment in the AI ​​company marks Masayoshi Son's biggest ever bet. This figure, who has been in the global technology investment community for decades, is known for his extreme enthusiasm for risks.

Investors embraced the concentrated bet. SoftBank's stock price has risen nearly 100% in the past year, in part because SoftBank is one of the few listings that allows public investors to participate heavily in OpenAI. SoftBank holds 11% of OpenAI's shares and is the second-largest private shareholder after Microsoft.

Through a series of new margin loans, SoftBank used its US$115 billion worth of shares in chip company Arm as collateral to raise US$20 billion; and used its shares in Japanese telecom operator SoftBank as collateral to raise US$8 billion. Other new debt includes a $3 billion loan related to its in-house hedge fund unit, Polaris.

SoftBank Chief Financial Officer Yoshimitsu Goto said on Thursday that the company's debt accounts for only 20% of total asset value - a more conservative lending policy established by SoftBank after the collapse of previous technology bubbles and panic among investors. This 20% threshold does not include some borrowings, such as margin loans collateralized by Arm shares. SoftBank said the reason is that such loans are secured by shares and the company itself is not directly responsible for repayment.

Yoshimitsu Goto also pointed to a variety of other avenues for additional capital raising, including further debt issuance or the sale of shares in other companies. Through its large-scale start-up investment fund Vision Fund, SoftBank holds more than US$23 billion in listed company stocks, including Korean e-commerce Coupang and Asian travel platform Grab.

This week, Japanese Prime Minister Sanae Takaichi won the election on Sunday. The market expected that she would increase strategic investment in key industries such as artificial intelligence and semiconductors, and SoftBank's share price was boosted.

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