Startups & Funding
SoftBank secures $40B loan to fund OpenAI investment
SoftBank has secured a $40 billion loan to fund its $30 billion OpenAI investment, which may signal lender expectations of an OpenAI public listing later this year.
On Friday, the Japanese conglomerate SoftBank announced that it has taken on a new $40 billion loan. This loan is to help the company cover its $30 billion commitment to invest in OpenAI, which was made as part of the artificial-intelligence model maker’s record-breaking $110 billion funding raise last month. This new $30 billion investment brings SoftBank’s total bet on ChatGPT’s maker, OpenAI, to over $60 billion.
According to SoftBank, the details of the loan are structured as follows:
- Total Amount: A new $40 billion loan.
- Loan Term: A 12-month term, meaning the balance must be repaid or refinanced by next year.
- Collateral Structure: The loan is unsecured, meaning it is a loan not backed by collateral.
- Lenders: The capital is being provided by JPMorgan Chase, Goldman Sachs, and four Japanese banks.
The unsecured nature of the debt and its 12-month term suggest that lenders anticipate an OpenAI public listing later this year. Because the loan is unsecured—meaning it is not backed by collateral—and carries a 12-month term, it could signal that lenders believe OpenAI’s public listing will come later this year, providing SoftBank the liquidity to settle the debt. Specifically, some outlets, like CNBC, have reported that lenders believe OpenAI’s public listing will come later this year.
If OpenAI does execute a public listing—or initial public offering (IPO)—later this year, it would presumably provide SoftBank with the necessary liquidity, meaning the availability of cash, to settle the debt. Since an OpenAI public listing would provide this liquidity, it would allow SoftBank to meet its obligations within the 12-month timeframe. Without the liquidity from a public listing, SoftBank would face the requirement to either repay or refinance the $40 billion loan by next year.
Why it matters
The 12-month, unsecured nature of the loan suggests that major lenders anticipate an OpenAI public listing later this year, which would provide SoftBank the necessary liquidity to repay the debt.