SoftBank plans sale of stake in Nvidia next year

By BLOOMBERG

LONDON • SoftBank Group Corp is planning to offload its stake in Nvidia Corp early next year as shares in the graphics chipmaker continue to slide, according to people familiar with the matter.

The Japanese investor could make about US$3 billion (RM12.57 billion) in profit from the trade, said the people, who asked to not be identified because the matter isn’t public. No final decision has been made and SoftBank may opt to keep its stake or sell only part of it, the people said.

While SoftBank still holds an equity stake in Nvidia, it has constructed a so-called collar trade of about US$6 billion, the people said, which allows investors to amass stakes while protecting themselves against a decline in stock prices. SoftBank has structured equity trade deals with investment banks to hedge against a drop in Nvidia’s share price, the people said.

For much of this year, Nvidia’s stock had been on a tear, benefitting from a range of factors from artificial intelligence to cryptocurrency mining. However, Nvidia’s shares have fallen 48% since their peak on Oct 1 as the trade spat between the US and China combined with weaker demand and growth prospects for chipmakers.

The dramatic fall in its share price has caused SoftBank to lean toward offloading its stake, the people said.

Nvidia fell about 2% to US$149 per share at 1:20pm in New York trading on Tuesday, giving the Santa Clara, California-based company a market value of about US$90.9 billion.