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Son makes $58b on Alibaba with Buffett-type return

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Published : 2014-05-08 21:00
Updated : 2014-05-08 21:00

With Alibaba Group Holding Ltd. filing to go public, the biggest winner won’t be founder Jack Ma or his fellow executives or even venture capital backers like Silver Lake Management LLC. It’ll be Japan’s Masayoshi Son.

Fourteen years ago, Son’s SoftBank Corp. started with a $20 million bet on a then-unknown Web portal connecting Chinese manufacturers with overseas buyers. That site evolved into China’s biggest Internet shopping mall and SoftBank’s stake is now estimated to be worth about $58 billion, an exceptional return even by Silicon Valley’s standards.

The IPO burnishes Son’s reputation as one of the world’s savviest investors and provides more capital to a man on the hunt for deals. After taking control of the U.S. carrier Sprint Corp. last July, Son made no secret of his interest in T-Mobile U.S. Inc. Analysts say he may also pursue European wireless operators or take another look at music labels, after his $8.5 billion bid for Vivendi SA’s Universal Music Group was rebuffed.

“The guy is the Warren Buffett of Asia,” said Greg Tarr, managing partner at seed fund CrossPacific Capital in Palo Alto, California. “In venture capital, the way we measure success is how much was put in initially and what’s the return. Every now and then you have something worth 500 times, like a Twitter or an Alibaba.”

Over three decades, Son used borrowed money to transform the software wholesaler he founded in 1981 into a phone company spanning two continents. In Japan, he built a challenger to larger carriers and was first to bring Apple Inc.’s iPhone to the country. He bought Sprint to take on the top players in the U.S., Verizon Communications Inc. and AT&T Inc.

The 56-year-old also created a venture-capital goliath with investments in more than 1,300 technology businesses. They include Yahoo Japan Corp., the nation’s biggest Web portal, Zynga Inc., creator of smartphone gaming hits FarmVille and Mafia Wars; and GungHo Online Entertainment Inc., maker of the Puzzle & Dragons game.

Among other more eclectic stakes: Cheezburger Network, a collection of humor websites, and Buzzfeed Inc., an online compiler of quirky lists like “58 Extremely Disappointing facts about the class of 2018” or “10 Ridiculous Things People do in the Club.”

Son’s biggest bet so far was last year’s $22 billion deal for control of Sprint, which gave SoftBank access to about 50 million U.S. subscribers. Many are just starting to use their phones to watch videos and search the Web ― pursuits already popular in Japan.

After the Sprint deal, Son last December sought about $20 billion in bank loans to buy Deutsche Telekom AG’ s 67 percent stake in T-Mobile, the smallest of the four national carriers, people familiar with the matter said at the time. (Bloomberg)

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