Elon Musk responded to reports that SoftBank plans to raise up to $100 billion from Gulf investors by saying: only fools would give them money. The Financial Times reported on Friday that SoftBank founder Masayoshi Son has been in talks with high-level officials, including those from the UAE, about this funding for a new round of AI investments. SoftBank declined to comment, and Reuters stated it could not verify the information at this time.

The reported use of the funds is to establish a fund, acquire companies, and then use AI and other advanced technologies to transform operations. Bloomberg added that the transformation would involve machines from SoftBank's robotics division, Roze. This is not a closed fund; it is still in early discussions.

The context of the same week is that SoftBank just completed a $30 billion investment in OpenAI, part of its commitment to the parent company of ChatGPT in the last round. Last month, SoftBank issued $11.1 billion in high-yield corporate bonds to fund this bet, which was noted as the largest high-yield corporate bond issuance globally. The new $100 billion, if finalized, would stack on top of this completed investment and the bond issuance.

The approach is old. The first Vision Fund reached $100 billion in 2017, with the Saudi Public Investment Fund and UAE's Mubadala as core investors. Son has returned to the Gulf for this round. Musk's response did not include any holdings or trades; he simply denied continuing to give money.

The public records of the Vision Fund include large losses from companies like WeWork, as well as projects that later recouped investments through public listings and reductions. The report did not provide details on the management fees, investment ratios, or SoftBank's own contributions for the new fund. If Gulf funds enter, they are buying into Son's plan for another platform acquisition and AI transformation.

This is a rumor-driven fundraising effort. The seller is SoftBank, looking to bolster its next round of AI bets, while the buyers named are Gulf sovereign funds and high-level officials. Beneficiaries would be companies that could be acquired and transformed if the fund is established, as well as OpenAI, which has already secured a $30 billion commitment; under pressure are investors from the previous Vision Fund whose returns did not meet expectations, and bondholders who just subscribed to the $11.1 billion high-yield bonds. Musk stands on the side of not giving money, and formal terms have yet to emerge.

Source: Public Information