The Story
SoftBank just announced the launch of its second mega fund, Vision Fund II. It comes two years after the Japanese company launched the world’s biggest tech fund, disrupting the venture capital industry as it pumped billions into fast-growing companies like Uber, WeWork and Flipkart.
Impact on Businesses and Law firms
It was Linklaters that was offered the job on the first fund after a specialist from the firm successfully pitched to the CEO in Tokyo. Fund lawyers from London, Tokyo and New York were then involved in drafting the fund documentation.
The nature of investors in that fund made for an interesting yet challenging job. SoftBank’s first fund was supported by substantial checks from Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala Investment Company. Linklaters’ lawyers would have been responsible for negotiating the terms on which the investors contribute their money. They would also help to reconcile the different interests and any conflicts between investors. Due to the size of their investments, terms appear to have been negotiated to allow the UAE and Saudi Arabian sovereign wealth funds (funds owned by the state) retain a say over certain deals, including veto rights on deals over a certain size.
Linklaters’ lawyers also helped to structure the fund, which is notable because of its size and because of its reliance on leverage. This is because the Vision Fund, unlike most funds, raises its capital through a combination of preferred debt and equity. Preferred debt promises a regular payment and more security if things go wrong, but it also means investors receive less of the upside.
With the influx of new capital, the fund’s portfolio companies can also do more deals. This means plenty of legal work to go around, such as the 16 law firms currently involved in the upcoming Sprint/T-Mobile merger.
By Jaysen Sutton
