Loan institutions are cautious in handling AI-related assets. SoftBank restarts $10 billion OpenAI equity collateral loan negotiations.

According to two informed sources, SoftBank Group's previous plan for a billion-dollar loan was temporarily shelved due to difficulties in valuing private companies. Now the group is once again in negotiations with a consortium of lenders, planning to use its stake in OpenAI as collateral to apply for a total loan of $10 billion. The sources stated that to alleviate concerns from lending institutions, the Japanese technology investment group has promised to provide repayment guarantees for the loan. If the collateral stake in OpenAI depreciates, the banks can seek repayment from SoftBank. Reportedly, the consortium of lenders participating in the loan is expected to include Goldman Sachs Group, Inc., JPMorgan Chase, and Mizuho Financial Group Inc Sponsored ADR. SoftBank and OpenAI have not responded to requests for comments, while Goldman Sachs Group, Inc., JPMorgan Chase, and Mizuho have declined to comment on the matter. The sources added that this financing plan is part of SoftBank's strategy to raise funds for its large artificial intelligence (AI) investment strategy. This type of financing falls under "margin loans," which are similar in nature to credit lines. The sources stated that originally SoftBank planned to rely solely on its stake in the ChatGPT developer to obtain the loan, but faced opposition from banks who argued that if the collateral depreciated, the banks would not have other recourse against SoftBank. Under the original structure, SoftBank had no legal obligation to repay the debt. These negotiations highlight the increasing caution of financial institutions towards equity collateral loans for private companies. Compared to publicly traded company stock, the valuation of privately held company equity is not only difficult to determine, but also more challenging to liquidate. However, it is currently unclear whether lending institutions have additional concerns about the valuation of OpenAI itself. In recent years, the competition in the global AI field has become increasingly intense, resulting in a sharp increase in the valuation of leading AI companies such as OpenAI and Anthropic. Under the leadership of founder Masayoshi Son, SoftBank has become one of the largest global investors in OpenAI, aiming to establish this Japanese conglomerate as a leading investor in the AI field. The company has committed to investing over $60 billion in OpenAI and related AI infrastructure projects, including the "Gateway to the Stars" data center project announced last year in partnership with OpenAI and Oracle Corporation. SoftBank has primarily relied on debt and asset-backed financing to support its various investment strategies. In recent months, the company has explored various financing options based on its investment portfolio. Last year, SoftBank sought to raise $5 billion in margin loans using its stake in chip design company Arm Holdings as collateral. Arm's stock price surged due to investor optimism about AI. Unlike the financing for OpenAI, the Arm loan was backed by publicly traded company stock, making it easier for lenders to assess and liquidate when necessary. According to previous reports, SoftBank had previously attempted to raise at least $10 billion in margin loans using OpenAI's equity as collateral, but after encountering resistance from lenders, reduced the target to around $6 billion. OpenAI secretly submitted an initial public offering (IPO) application to the U.S. Securities and Exchange Commission in June of this year, which could ultimately make SoftBank's stake in OpenAI easier to value and liquidate for lenders. However, there are recent reports that OpenAI is considering postponing the IPO until next year. In addition, SoftBank is also facing pressure to repay $40 billion in bridge loans by March 2027, which were used to finance its investments in OpenAI. SoftBank previously stated that it expects to repay the loan "by utilizing existing assets and other financing measures." This year, Masayoshi Son has further accelerated SoftBank's spending in the AI field, investing in areas such as data centers, semiconductors, and Siasun Robot & Automation, aiming to position the conglomerate at the core of rapid industry expansion.