SoftBank says additional Alibaba ADS registration not tied to future deal

“The registration of the ADR conversion facility (F6 filing, which was filed by Alibaba), including its size, is not tied to any specific future transaction by SBG,” SoftBank said in a statement to Reuters.

Ecommerce giant Alibaba last week filed to register an additional one billion American Depository Shares. The move, Citigroup analysts said this week, “might also suggest potential selling intention by SoftBank.”

“Since Softbank has been a pre-IPO investor, we believe a large proportion of those shares have not been previously registered as ADS,” Citi analysts including Alicia Yap wrote.

SoftBank chief executive Masayoshi Son told analysts he was “surprised” and had not requested the filing, according to a person familiar with the matter speaking on the condition of anonymity.

Alibaba “might have registered in advance a large number of ADS to support any future conversion plans of shareholders,” Citi wrote in a new note on Wednesday.

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SoftBank’s stake of around 25% in Alibaba is worth around $82 billion and has its origins in a $20 million investment in 2000. That rivals SoftBank’s own market capitalization of around $80 billion.

Alibaba’s shares have fallen by 60% since highs in October 2020 amid a regulatory crackdown against tech firms in China.

SoftBank has used its Alibaba shares as collateral for loans and in the past trimmed its stake using derivative transactions to capture upside from any rise in Alibaba’s share price.

Investor attention is focused on potential moves by the group to raise funds as it expands investing through its Vision Fund and buys back shares after the collapse of the deal to sell chip maker Arm to Nvidia.