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SoftBank defies concerns over Saudi links with new investment

Investors expected to quiz CEO on future strategy as group posts results

SoftBank Group CEO Masayoshi Son, right, and Saudi King Salman meet in Saudi Arabia in March 2017.   © Kyodo

TOKYO -- SoftBank Group has shrugged off concerns over its links to Saudi Arabia with a new investment into a U.S. startup ahead of its earnings on Monday, despite worldwide outrage over the murder of Saudi journalist Jamal Khashoggi.

The Japanese conglomerate's Saudi-backed Vision Fund invested $1.1 billion in View, a California-based maker of window glass that automatically adjusts to reduce heat and glare, View announced Friday.

The deal may signal SoftBank's clout after concerns grew that startups might shun money from the Vision Fund in light of Khashoggi's murder in the Saudi Consulate in Istanbul. The $100 billion fund, launched two years ago, was the world's biggest investment vehicle in the tech sector and has since poured billions of dollars into the world's most valuable startups. It now holds stakes in ride-hailing giants Uber Technologies and Didi Chuxing, as well as co-working company WeWork.

But the money's source -- Saudi Arabia's public investment fund contributed $45 billion to Vision Fund -- began to raise qualms in Silicon Valley after Khashoggi's disappearance and killing a month ago. The case is far from over: On Friday, Turkish President Recep Tayyip Erdogan wrote in The Washington Post that the order to kill Khashoggi "came from the highest levels of the Saudi government," meaning Crown Prince Mohammed bin Salman. But the new deals indicate that at least some American entrepreneurs remain eager to take SoftBank's investments.

Charlotte Douglas International Airport in North Carolina uses View's Dynamic Glass, which reduces glare and unwanted heat within the terminal, providing a more comfortable environment for passengers. (Photo courtesy of View)

"We are excited to have this strong endorsement of our vision from SoftBank," Rao Mulpuri, CEO of View, said in a news release. 

The deal comes ahead of SoftBank's second-quarter earnings announcement on Monday afternoon, when billionaire CEO Masayoshi Son is to make his first public appearance since Khashoggi's murder. He canceled a speech at a major investment conference in Riyadh last month in light of the incident.

Son is likely to face a long list of questions from investors. While SoftBank's cash cow is its legacy telecommunications business, the Vision Fund has emerged as a key profit generator. In the April-June quarter, it accounted for about a third of SoftBank's 715 billion yen ($6.32 billion) operating profit. That figure was 49% higher than the previous year's, thanks to increases in the value of its investments as well as the sale of its stake in Indian e-commerce startup Flipkart to Walmart of the U.S.

But SoftBank's Tokyo-listed shares have declined in recent weeks amid a sell-off in technology stocks around the world, such as China's Alibaba Group Holding.

Even SoftBank's core telecommunications business is under scrutiny now. Shares tumbled after NTT Docomo, Japan's largest carrier, last week said it would cut service charges by up to 40% next year. It is a particularly testing time for SoftBank, which is considering an initial public offering of its mobile unit in December.

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