- General Motors is acquiring SoftBank Vision Fund 1's equity ownership stake in its majority-owned Cruise autonomous vehicle unit for $2.1 billion.
- Softbank's exit comes as the technology investment firm was set to have to invest a second tranche of $1.35 billion upon Cruise's commercial deployment of vehicles, which GM will now pay.
- It also follows Cruise CEO Dan Ammann abruptly leaving the company in December.
SoftBank Vision Fund 1 first acquired a minority ownership in Cruise through a $2.25 billion deal in 2018. Its exit comes as the prominent technology investment firm was set to have to invest a second tranche of $1.35 billion as part of the deal upon Cruise's commercial deployment of vehicles, which GM will now pay.
It also follows Cruise CEO Dan Ammann's abrupt departure from the company in December. Ammann was reportedly let go from Cruise by GM CEO and Chair Mary Barra, who also chairs Cruise's board, over disagreements in strategy, including when to take the company public.
GM has signaled it plans to keep the company public for the foreseeable future. Ammann's successor, Cruise founder Kyle Vogt, tweeted on Friday that an IPO would be a "major distraction, especially right now" as the company is scaling up its newly-launched driverless ride-hailing service in San Francisco.
The SoftBank announcement was made as GM and Cruise also announced the launch of a "Recurring Liquidity Opportunity Program", in which Cruise employees with vested stock options will be able to sell them to GM.
"Employees can sell as many vested shares as they like at a fair price determined by a third party," Vogt said on Twitter. "Or they can hold onto their shares and hope for appreciation over time."
The program is apparently intended to help retain Cruise employees, who may have been hoping for a windfall from an IPO of the company, something that Wall Street has been hoping for as well.
A GM spokesman said SoftBank's exit was not related to the employee program. He referred questions about Softbank's decision to the company. A SoftBank spokesman declined to comment.
Since SoftBank's initial investment, much of the hype and investor optimism surrounding autonomous vehicles has crashed down to reality, including GM and Cruise missing an initial deployment of self-driving vehicles in San Francisco in 2019.
The dramatic downturn in tech stocks since late 2021 also is problematic for SoftBank, which has been among the biggest investors in pre-IPO companies across the globe in the past half-decade. The new deal with GM frees up capital that SoftBank could deploy elsewhere.
SoftBank's investment division ran into problems in 2019 after office-sharing company WeWork had to pull its IPO and massively downsize its business to skirt collapse. SoftBank took a multibillion-dollar writedown on WeWork after rescuing the company and becoming 80% owner.
While SoftBank bounced back during the pandemic, thanks to a large position in DoorDash, OpenDoor and other companies that had blockbuster market debuts, the rapid downturn in high-growth tech stocks this year has again created troubled for Japanese conglomerate.
It's the biggest shareholder in South Korean e-commerce site Coupang and Chinese ride-hailing app Didi, which are both down significantly. With the IPO market shuttered indefinitely, SoftBank has limited opportunities to get liquidity from many of its big dollar bets.