By Ambar Warrick
Investing.com -- Hong Kong-listed shares of Alibaba Group Holding Ltd (HK:9988) (NYSE:BABA) fell sharply on Thursday after a report said that SoftBank Group Corp (TYO:9984) plans to offload almost its entire stake in the e-commerce giant, as the Japanese investment house struggles with a severe rout in its technology investments.
The sale will cut Softbank’s share in Alibaba Group to just 3.8%, the Financial Times reported on Wednesday, citing an analysis of regulatory filings with the Securities and Exchange Commission.
Alibaba’s shares slumped as much as 4% in Hong Kong trade to HK$92.20, also spurring a nearly 1% loss in the broader Hang Seng index. Softbank’s shares were flat, while the Nikkei 225 index inched 0.1% higher.
Softbank’s sale comes after the investment house offloaded about $7.2 billion worth of Alibaba shares this year, which was preceded by a record $29 billion selldown in 2022. The firm had at one point controlled as much as 34% of Alibaba.
Alibaba has served as a sole bright spot in Softbank’s portfolio, with the share sales coming largely to generate cash as the investment firm navigates a severe downturn in its technology holdings over the past year.
Alibaba’s valuation also tumbled to near-record lows in 2022, as the e-commerce giant was hit by a Chinese regulatory crusade against the country’s internet giants. But Softbank was still up substantially on its initial investment in the firm, having paid $20 million for a sizeable stake in Alibaba over 20 years ago.
The potential share sale comes as Alibaba’s shares rose sharply through March, after the firm announced plans to split into six separate companies. Signs of easing regulatory scrutiny in China, as well as optimism over a Chinese economic rebound, also saw investors pile back into the stock.
Softbank is planning a listing of UK chip designer Arm, which is among the few holdings still generating positive returns for the Japanese firm. A sharp rise in interest rates decimated the value of Softbank’s portfolio through 2022, as broader markets soured on technology stocks.