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SoftBank Negotiates Larger Apollo-Backed Loan to Fund OpenAI Stake
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SoftBank Seeks Larger NAV Loan from Apollo
Sources say Apollo Global Management is in talks with SoftBank Group to raise a net-asset-value (NAV) loan secured by assets in SoftBank’s Vision Fund 2 from the current $5.4 billion to roughly $9 billion. The parties have not finalized the amount, and representatives for both firms declined to comment. People familiar with the discussions requested anonymity because the negotiations are private.
Financing Structure and Prior Arrangements
The NAV loan was first provided by Apollo to Vision Fund 2 in 2021 and was increased by $900 million last year, bringing the facility to $5.4 billion. NAV loans allow private-capital funds to draw cash against the net value of their portfolio without selling underlying investments. In August, SoftBank raised an additional $10 billion loan, also secured by its OpenAI equity, from a group of lenders that included Apollo. Market sources indicate that any further expansion would be collateralized by SoftBank’s OpenAI holdings or other Vision Fund 2 assets.
Scale of SoftBank’s OpenAI Commitment
SoftBank has pledged $64.6 billion to OpenAI, making it one of the largest investors in the AI developer. Earlier this year the conglomerate committed roughly $30 billion to OpenAI’s $110 billion funding round, valuing the company at about $840 billion. Vision Fund 2, which had more than $100 billion of committed capital as of February, has made over 300 investments since its inception and has recently increased its exposure to OpenAI.
Potential Implications and Risks
Analysts note that the proposed loan increase would give SoftBank additional liquidity to sustain its AI investment strategy, but it would also raise the group’s leverage, interest expenses, and exposure to fluctuations in OpenAI’s valuation. Bloomberg and other market observers reported that credit-default swaps on SoftBank’s debt rose to a three-year high this week, reflecting broader concerns about AI-related credit risk. The financing move underscores the growing appetite of private-credit firms for large-scale technology funding while highlighting the balance SoftBank must strike between aggressive AI investment and financial stability.