Has Japan’s Softbank Found the Next Alibaba?


Japan’s Softbank Corp. is once again charging ahead on foreign investment, with plans to purchase a major Indonesian online retailer. Led by its CEO Masayoshi Son, Softbank is intent on making strategic foreign acquisitions, with the investment in PT Tokopedia becoming the third overseas buy under the company’s new investment arm Softbank Internet and Media, Inc (SIMI).

Tokopedia was started in 2009 and is today Indonesia’s largest ecommerce site. Softbank and Sequoia Capital have announced an investment of $100 million in the company, with both firms receiving a seat on Tokopedia’s board. SIMI’s CEO Nikesh Arora has said that by “leveraging synergies with our network of Internet businesses, we are confident we can help Tokopedia’s success in the Indonesian market.” Tokopedia’s services are similar to Amazon’s in the U.S. or Alibaba’s in China, with 10 million visits to its site every month, and 24 million products sold over the last four years.

Indeed, this new investment is directly in line with two of Softbank’s strategic goals: Expand in Southeast Asia and enter the online commerce market. The company experienced a significant setback this summer, after the massive $20 billion purchase of U.S. mobile provider T-Mobile late last year, Son failed to acquire T-Mobile’s domestic competitor Sprint, in a merger that would have made Softbank a major stakeholder in what would have been one of the three largest mobile companies in the U.S.

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Now with Tokopedia, Softbank appears to be driving toward its two strategic goals, and its past experience indicates that Softbank has an eye for investing in the next big thing in online retail. Its $20 million investment in China’s ecommerce behemoth Alibaba gave it at 32 percent stake in 2000. When Alibaba went public on September 19, its $215 billion valuation meant that Sofbank’s stake had ballooned to $60 billion.

While the size of this week’s investment relative to Softbank’s overall value is tiny, its penchant for making many purchases across a broad spectrum, which at times do not seem synergistic, may be the company’s main weakness. With a net debt at 3.1 times its earnings before interest, taxes, depreciation and amortization, based on annualized earning for the first quarter, Softbank will need to continue to focus on investments that reflect its core competencies and interests.

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