S&P research finds OpenAI to be one of SoftBank’s investments with the ‘weakest’ credit quality.
OpenAI is making SoftBank’s investment portfolio look bad, said financial analyst S&P Global, which lowered the Japanese investment firm’s outlook from ‘stable’ to ‘negative’, with a long-term issuer credit rating of ‘BB+’.
SoftBank is making massive bets on OpenAI, after already investing $30bn into the world’s largest private company as of last year. It is now is gearing to pour another $30bn into OpenAI over the course of the year.
With the new investment, S&P figures that OpenAI will represent 30pc of SoftBank’s investment assets – the same as its investments in Arm. And after the additional investment, SoftBank’s investment portfolio will likely exceed $320bn, making it one of the largest in the world.
However, S&P evaluation found OpenAI to be one of SoftBank’s investments with the “weakest” credit quality. The Japanese firm’s investments in AI majorly involve start-ups and private companies, including SambaNova, Wayve and ABB Robotics, which S&P said exposes SoftBank to “significant AI innovation risk”.
These kinds of investments could weaken SoftBank’s negotiating strength, S&P found, while the additional investment in OpenAI could also worsen the company’s loan-to-value (LTV) ratio.
Last November, SoftBank sold off all of its shares in Nvidia, which came to over $5bn. At the time, company chief financial officer Yoshimitsu Goto reiterated SoftBank’s belief in OpenAI and Arm, commenting: “OpenAI is one of our key growth drivers. Together, Arm and OpenAI are powering SoftBank Group toward our goal of becoming the number one platform provider for the artificial superintelligence era.”
An OpenAI initial public offering would be a well-needed boost for SoftBank’s investment portfolio, according to S&P, which also concluded that SoftBank will need to sell assets and holdings to improve its LTV.
“The negative outlook reflects our view that SoftBank Group’s large follow-on investment in OpenAI means it will take longer than we had assumed for the company to restore the liquidity and quality of its investment assets,” S&P said.
“The company may take measures to ease its financial burden, such as selling assets, but we believe the timing and scale of those measures remain uncertain.”
Don’t miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic’s digest of need-to-know sci-tech news.











