Like SoftBank, like Son


December 3, 2018

SoftBank files for a $21B IPO, and if things couldn’t get any swaggier, the company refused to set a share price range.
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SoftBank filed for a $21B IPO; no need for a price range

SoftBank Group filed for an IPO set to drop next month worth 2.4Tn yen ($21.16B), the second highest IPO ever.

Alibaba Group still holds the record for largest IPO at $25B, but SoftBank’s filing is the first time that a stock will debut on the Tokyo Stock Exchange without a price range: the Japanese tech giant plans to sell shares at 1.5k yen ($13.21) apiece or no dice.

SoftBank’s got swag

Usually, potential investors are given a range to pad out potential adjustments of the final price. But when you’re SoftBank founder Masayoshi Son, you set one price and one price only.

Son and his bankers are betting that they’ll be able to sell all of the shares in the initial public offering of their cash-cow business, which currently has around 34m mobile subscribers and stretches across wireless, broadband and fixed-line services.

Son has a Vision, now he wants multiple

Son is already the biggest investor in the tech space. Last year, he formed a $100B Vision Fund to invest in the fast-growing AI and e-commerce industries.

But, the Vision don’t stop there: With the IPO, Son plans to raise new capital to start a $100B fund every 2 or 3 years.

Despite SoftBank’s confidence, this IPO isn’t exactly risk-free

The IPO looks tasty to investors. Based on SoftBank’s net income in the last fiscal year, investors who buy at the anticipated IPO price would get a dividend yield of almost 5%, which is a sweet deal anywhere, and especially sweet in Japan, a country that Bloomberg labeled the “land of negative interest rates.

BUT…

Japan’s government is increasing its pressure on carriers to lower rates (that are among the highest in the First World). If that happens, SoftBank’s profit could nosedive and jeopardize those tasty yields.

Confidence is contagious
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US charges British billionaire with fraud for his $11.1B HP deal, the latest in a 7-year saga

The US government charged British tech entrepreneur Mike Lynch with fraud related to the 2011 sale of his company, Autonomy, to HP. Less than a year after paying $11.1B for Autonomy, HP wrote down its value by $8.8B, claiming Autonomy misrepresented its value.

The tumultuous timeline of a botched buyout:

  • 2011: HP acquires Autonomy for $11.1B (a 79% premium)
  • 2012: HP writes down its value by $8.8B (with no fraud accusations)
  • 2012: US and UK open fraud cases against Autonomy
  • 2015: UK drops criminal case against Autonomy
  • 2015: HP sues Lynch & co. for fraud, demands $5.1B (still in court)
  • 2015: Lynch countersues HP for $160m (still in court)
  • 2018: US convicts Autonomy CFO of fraud
  • 2018: US accuses Lynch of fraud

Either Lynch is a liar or HP didn’t do their due diligence

Lynch and his lawyers accuse HP of scapegoating Autonomy to cover up its “long history of failed acquisitions.”

Prosecutors now claim Lynch and his lackeys inflated revenue by backdating written agreements to record revenue in earlier periods and lying to auditors and regulators.

Now what?

Lynch’s lawyers dispute the charges, arguing the case belongs in civil court in Britain, not criminal court in California.

If Lynch and co-defendant and former Autonomy CFO Sushovan Hussain (who has already been convicted of 16 other counts of fraud) are convicted of these 14 counts of conspiracy and wire fraud, they face up to 20 years in prison and a $250k.

» Nobody wins here

To curb crypto fraud, the SEC made examples out of DJ Khaled and Floyd Mayweather

The federal government charged DJ Khaled and Floyd Mayweather for illegally promoting cryptocurrencies without disclosing their compensation.

The Snapchat-superstar DJ and the Instagram-active boxer both forked over their fraudulent funds, but they won’t be the last celebrities to get slapped on the wrist now that the SEC has declared war on influencers.

Crypto has rules now

According to the SEC, “Any celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion.”

But Mayweather — who tweeted “You can call me Floyd Crypto Mayweather from now on” before encouraging his followers to buy crypto — failed to disclose payments of $300k to promote 3 separate coins. Khaled failed to disclose a $50k payment from one of those same coins.

The SEC is over the influence

This case is the first time the SEC has charged individuals for promoting ICOs, but it likely won’t be the last.

“Social media influencers are often paid promoters, not investment professionals,” the SEC tweeted. “And the securities they’re touting… could be frauds.”

Now that the SEC has finally defined ICOs as securities, it plans to step up enforcement to prevent influencers, celebrities, and other crypto insiders from committing fraud — which could cause crypto markets to fall even further after a year of historic losses.

» Crypt-Uh-oh…

Richard Branson is confident Virgin Galactic will have astronauts in orbit by Christmas

Last week, Richard Branson made a bold claim, telling CNBC he is “pretty confident” that Virgin Galactic will have astronauts in (sub)orbit before Santa’s in our chimneys.

According to Branson, the first few trips into space will be flown by test pilots with no tourists on board, and, he’ll be the first passenger… once it’s safe, of course.

The verdict is still out on that

4 years ago, a pilot was killed during a VG test flight. The tragedy left a doubtful future for the space tourism company.

Still, several people are ready to pony up the $200k-$250k for a seat on VG’s “upgraded” design, SpaceShipTwo, that will take them up 50 miles past the earth’s atmosphere.

Unlike typical zero gravity flight (which generally allows 20-30 seconds of weightlessness), SpaceShipTwo lets billionaires feel alive again for a whopping 3 minutes.

Virgin Galactic is NOT SpaceX

In the future, Branson has his eyes set on the moon and beyond, as VG assumes its position as the playboy of the new private space race, alongside the likes of more serious space startups Blue Origins and SpaceX.

Dear Santa, please don’t send us to space with Richard Branson for Christmas.

HOT TAKE
Wes Schlagenhauf, News Writer at The Hustle
@wesschlagenhauf

This is sad. A guy literally died trying to make Branson’s extreme-wet-dream come true, so he and other billionaires can have a new toy. Meanwhile, SpaceX is launching real rockets into space that serve a scientific purpose.
Show this thread
» No more ideas, Branson
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In our book, two’s company, but three’s a party. So, we’re offering a “Squad” discount for groups of 3+ to our first ever Hustle Con East in NYC on December 6th.

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