OpenAI funding boosts Softbank Group Loan to $11.9 billion
SoftBank Group Corp. has successfully obtained a $11.87 billion loan to bolster its investment in the US artificial intelligence company OpenAI, according to sources, an increase from its previous target of $10 billion. The Japanese conglomerate finalised the two-year facility last week, garnering commitments from approximately 20 banks, according to sources. The financing arrives amid growing concerns among certain executives regarding the necessity to decelerate the advancement of AI, citing increasing risks associated with the technology. OpenAI Chief Executive Officer Sam Altman stated in an interview with Fortune that the company will not pursue a public offering this year as it focuses on addressing safety-related concerns.
SoftBank shares experienced a decline of up to 13% on Monday, marking the most significant drop since July 17. The latest borrowing would augment SoftBank’s series of recent debt financing endeavours associated with its investment in OpenAI. That encompasses a $10 billion margin loan secured by its OpenAI stake and a prospective bond issuance of up to $20 billion, notwithstanding apprehensions regarding escalating credit risks within the artificial intelligence sector. SoftBank announced last week its intention to repay the remaining balance of a $40 billion loan acquired earlier this year to support its investment in OpenAI. The company intends to settle the $25.9 billion it owes on September 15, as stated in a recent announcement. The non-collateralized borrowing is set to mature in March of the following year.
Meanwhile, SoftBank is scheduled to conduct meetings with investors in New York this week to gauge interest in a potential sale of US dollar junk bonds. It is contemplating the raising of $10 billion to $20 billion through the bond offering, according to individuals familiar with the situation. SoftBank, established and directed by billionaire Masayoshi Son, is expected to allocate nearly $65 billion to OpenAI by October. The company has already raised approximately $37 billion this year through offshore and domestic bond sales and loans, including the latest facility, as per data.
