Within a month, Japanese technology conglomerate SoftBank reached a deal with rivals Ola and Uber to invest billions. And, this is not the first instance of SoftBank putting its bet on its own competitors: The company is investing in Uber despite having put its money in rivals Didi Chuxing in China, Grab in Southeast Asia, and 99 in Brazil. Analysts say this is a part of the Japanese conglomerate’s strategy to have a say in how industry shakeout unfolds, and gain if one or more emerges as a winner.
In the beginning of October, Softbank was among a group of investors that have invested $2 billion in India’s ride-hailing company Ola.A month later, it has reached a deal with Uber to invest billions in the ride-hailing giant, which reportedly is $1 billion for 14% stake in the company. While the deal talks between Uber and Softbank is going for a long time, the later still continued infusing money in Ola, despite making losses.
In October 2014, Softbank invested $210 million in Ola for the first time and had then become the biggest investor of Ola. In March 2017, Softbank reported an annual loss of $1.4 billion from its investments in Ola and Snapdeal.
The strategy if successful will put SoftBank at the top of global business in the ride-hailing industry, which speaks about company’s CEO Masayoshi Son’s style of working. The Korean-descendant Japanese businessman has big plans. In fact, a plan for the next three hundred years. Son sees a lot of potential in ride-hailing business and is investing all major players to gain, should one of them emerge as a winner, or the rival mergers begin in future.
“Son’s strategy makes sense from a global point of view. The investments could one day turn into a significant stake in a combined company if (or more likely when) mergers start to happen,” CNN reported quoting analysts. Whether SoftBank wants to consolidate rivals or simply cross-pollinate lessons among the group, it not clear, but what is clear is that SoftBank aims to do one or the other, an Uber investor told Reuters.
While analysts find Softbank’s strategy a long-term plan, an instance back home draws a picture of how the Japanese conglomerate likes to function. Softbank, the single-largest investor in Flipkart’s rival Snapdeal, wanted to switch its stake in loss-making Snapdeal with that of the market leader Flipkart. Softbank had pushed for selling Snapdeal, in which it holds 33% equity stake, to Flipkart for $1 billion. In August, the merger deal between Snapdeal and Flipkart fell through on disagreement over valuations, and Softbank invested funds in Flipkart.