SoftBank gets upsized US$11.9 billion loan in OpenAI funding push

Japanese conglomerate SoftBank has secured a US$11.87 billion loan to bolster its investment in OpenAI, an artificial intelligence firm based in the United States, according to sources familiar with the matter. This significant loan, which is larger than the initially intended US$10 billion, was obtained from around 20 banks last week. The financing decision comes amid growing concerns over the risks associated with the rapid development of AI technology.

OpenAI's CEO, Sam Altman, indicated in a recent interview with Fortune that the company would not proceed with a public offering this year due to safety-related considerations. SoftBank's shares experienced a sharp decline of up to 13 percent on Monday, marking the steepest drop since July 17.

This latest borrowing adds to SoftBank's recent flurry of debt financing activities related to its investment in OpenAI. These include a US$10 billion margin loan secured through its stake in OpenAI and a potential bond sale of up to US$20 billion. Despite mounting concerns regarding credit risks in the AI sector, SoftBank has pledged to repay the balance of a US$40 billion loan it obtained earlier this year, which is targeted for repayment on September 15, according to a company statement.

SoftBank plans to retire the non-collateralized borrowing, which had an original maturity date of March 2027. Additionally, the company is expected to engage with investors in New York this week to solicit interest for a potential US dollar junk-bond sale, with the aim of raising between US$10 billion and US$20 billion, according to sources familiar with the matter.

Founded and led by billionaire Masayoshi Son, SoftBank aims to invest close to US$65 billion in OpenAI by October. So far this year, the company has raised approximately $37 billion from various bond sales and loans, including the most recent facility, as per Bloomberg-compiled data.