The Pulse
SoftBank Raises Arm Margin Loan to $25 Billion as AI Bets Grow
SoftBank increased its margin loan backed by Arm shares by $5 billion as it seeks funding for expanding artificial-intelligence investments, including its commitment to OpenAI.
AI.info Team ·
SoftBank Group Corp. has increased its margin loan backed by shares of chip designer Arm Holdings Plc by $5 billion to $25 billion, according to people familiar with the matter, as the conglomerate seeks funding for expanding investments in artificial intelligence.
The Japanese investment company renegotiated the facility and signed an agreement with creditors this month, the people said. They asked not to be identified because they were discussing private information. SoftBank declined to comment.
Arm Shares Back a Larger Facility
The increase is the third expansion of SoftBank’s margin loan using Arm shares as collateral. The facility began at $8.5 billion in 2023, rose to $13.5 billion in 2024 and reached $20 billion last year.
As of May, the loan was secured by 769 million Arm shares, representing about 72% of the chip designer’s outstanding stock, according to company filings. SoftBank owns almost 90% of Arm.
SoftBank had drawn $20 billion from the facility as of December, with the loan set to expire in September 2027. The loan remains priced at an interest margin of about 225 basis points over the Secured Overnight Financing Rate, plus a 25-basis-point credit adjustment spread, according to people familiar with its terms.
The latest transaction drew strong demand from lenders after Arm’s share price rose 142% this year. SoftBank had initially sought to increase the facility by $3 billion to $5 billion but received about $7 billion in lender demand, the people said. The borrowing capacity could rise further if Arm shares continue to climb.
Funding OpenAI and Other Acquisitions
SoftBank has been pursuing a series of acquisitions and investments led by its commitment to OpenAI, the creator of ChatGPT. The company has committed nearly $65 billion to OpenAI, according to the report.
Other recent purchases include ABB Ltd.’s industrial robotics business for $5.4 billion and data-center-focused private-equity firm DigitalBridge Group Inc. for about $3 billion in cash.
To finance those deals, SoftBank has been replacing shorter-term loans with debt carrying longer maturities to strengthen its financial position. The company repaid this week the entire outstanding balance of $25.9 billion on a $40 billion one-year loan used to fund its investment in OpenAI.
SoftBank also secured a $10 billion, two-year loan last month using its OpenAI stake from lenders including Apollo Global Management Inc. Apollo is discussing increasing the size of a loan to $9 billion from $5.4 billion to help SoftBank fund its OpenAI investment, according to Bloomberg reporting.
AI Infrastructure Plans Add to Financing Needs
SoftBank’s wider artificial-intelligence ambitions include aggressive data-center expansion in the United States and France. Its US unit, SB Energy Inc., is developing 8.8 gigawatts of data-center capacity across America, a program estimated to require $174 billion in capital spending.
SoftBank has also announced plans to build a 5-gigawatt data center in France. The projects add to the financing demands created by the company’s investments in OpenAI, robotics and other artificial-intelligence infrastructure.
The Arm-backed loan gives SoftBank additional borrowing capacity without requiring an immediate sale of its Arm shares. At the same time, the facility exposes the company’s financing plans to movements in Arm’s stock price. A decline could reduce the value of the collateral and limit the amount lenders are willing to provide.