NEW YORK -- U.S. activist investment fund Elliott Management has acquired a more than $2.5 billion stake in SoftBank Group, pushing the Japanese group to make better investment decisions and strengthen corporate governance.
Founded by billionaire Paul Singer, the New York-based Elliott is apparently holding the equivalent of roughly 3% of SoftBank's market value.
According to sources, top executives at Elliott met with Chairman and CEO Masayoshi Son, Chief Financial Officer Yoshimitsu Goto and Executive Vice President Rajeev Misra, who oversees the Vision Fund, to convey their concerns.
"Elliott's substantial investment in SoftBank Group reflects its strong conviction that the market significantly undervalues SoftBank's portfolio of assets," an Elliott spokesperson told Nikkei. "Elliott has engaged privately with SoftBank's leadership and is working constructively on solutions to help SoftBank materially and sustainably reduce its discount to intrinsic value."
The fund has taken issue with SoftBank's decision-making process in selecting investment targets. SoftBank grossly overpaid for a stake in shared-workspace provider WeWork, necessitating a huge write-downs later on. Even those that managed to go public, such as Uber Technologies, are languishing in the stock market.
"SoftBank welcomes feedback from fellow shareholders," a spokesperson said in response to Elliott's statement.
Elliott, which manages more than $38 billion in assets, is among the most activist of funds. It sought changes to the business strategies of 14 investment targets in the U.S., Europe and Asia last year, according to a survey by U.S. investment bank Lazard. The fund's activities are closely watched, considering its history of taking such steps as pursuing legal action against the governments of Argentina and South Korea.
Elliott has begun targeting large-cap shares around the world by tapping its ample finances. Its biggest investment so far is believed to be AT&T, having disclosed last September that it has poured $3 billion into the telecom giant. AT&T complied with some of Elliott's demands and released in October a three-year plan that includes increased distributions to shareholders and asset sales.
The news was first reported by The Wall Street Journal.