Daily BriefsTMT/Internet

TMT: Softbank Group, Chindata and more

By September 13, 2020 No Comments

In today’s briefing:

  • Softbank Wrapping up Arm Sale While Wrestling With Alarmed Investors
  • Chindata Group Holdings Pre-IPO – Patchy Data but Is Growing Fast in a Hot Sector

Softbank Wrapping up Arm Sale While Wrestling With Alarmed Investors

By Vicki Bryan

Sold! Softbank is said to be closing in on a deal to sell Arm Holdings (ARM LN) to NVIDIA Corp (NVDA US) for more than $40 billion in cash and stock in a deal that could be announced as soon as Monday, according to reports out today by The Wall Street Journal and Financial Times.

This finally may be some good news for Softbank’s investors, shaken by news last week that it had launched a massive options program so large it helped move markets on stocks it just bought.

This was funded with cash Softbank had said it must protect against conditions too risky to allow it to execute promised stock buybacks and debt repayment to repair its damaged balance sheet (read more in Softbank’s Son “Feeling The Force” With Options Funded With Cash It Had Pledged To Protect on 9/8/20).

I warned last week Softbank had deliberately withheld and misrepresented material information about such a dramatic change in strategy direction and risk in its earnings presentation to investors just weeks ago.

On Sunday, Softbank’s top investors went straight to the top to find out why—the answer is troubling, but not surprising.

Read on for Bond Angle commentary.


Chindata Group Holdings Pre-IPO – Patchy Data but Is Growing Fast in a Hot Sector

By Sumeet Singh

Chindata Group Holdings aims to raise around US$400m in its US listing. Chindata is a data centre solution provider in Asia-Pacific with a focus on China. It currently operates six data centers in China and one in Malaysia and has numerous more data centers under construction.

The company is backed by Bain Capital and is almost like a startup, in the sense that it was recently formed via the merger of a China and Asia-Pac entity. Given the relative freshness of the firm, the company has taken the liberty of providing financials just for the past 18 months, which of course show rapid growth. Also, it doesn’t provide a whole lot of details about its individual assets. Furthermore, its two large clients account for a huge chunk of its revenue, one of which is Bytedance, the other being Wangsu.

On the positive side, Chindata has plans to more than double its capacity by the end of 2021, which will ensure that growth remains strong. Moreover, its Chairman and founder appear to have ample experience in the sector. It operates in a sector which has only seen investor demand increase during COVID-19 and hence, despite its lack of financials will probably still be hot. 

In this note, I’ll talk about the company’s background, its past performance and the above issues.


Before it’s here, it’s on Smartkarma