SoftBank to book $34 billion gain by cutting Alibaba stake

SoftBank Group Corp on Wednesday said it would book a gain of $34.1 billion by cutting its stake in Alibaba Group Holding as the Japanese investment giant looks to shore up its cash reserve as global markets deteriorate.The investment company will reduce its stake in Alibaba to 14.6% from 23.7% by settling prepaid forward contracts.

SoftBank’s Vision Fund investment arm recorded a loss of around $21.68 billion in the second quarter and $50 billion in the first half of the year as its tech bets soured, with Chief Executive Masayoshi Son on Monday pledging to reduce investment activity further and cut costs.

By settling the Alibaba share contracts, SoftBank “will be able to eliminate concerns about future cash outflows, and furthermore, reduce costs associated with these prepaid forward contracts,” it said in a filing.

“These will further strengthen our defence against the severe market environment.”