Apollo Global Management is in talks with SoftBank Group about boosting the size of a loan to $9 billion from $5.4 billion to help the Japanese firm finance its investment in AI giant OpenAI. The size of the financing, which is backed by assets in SoftBank’s Vision Fund 2, hasn’t been finalized, the people said, requesting not to be identified because the discussions are private. Representatives for Apollo and SoftBank declined to comment.
Apollo made the so-called net-asset-value (NAV) loan to SoftBank’s venture capital fund in 2021 and boosted it by $900 million last year to $5.4 billion. NAV loans borrow against fund assets and provide a way for private-capital firms to drum up cash. SoftBank has emerged as one of the biggest investors globally in artificial intelligence, putting its various borrowings to finance that push in the spotlight.
The cost of insuring the company’s debt against credit risks has been increasing, with credit-default swaps rising this week to a three-year high, amid a flareup in broader concerns about safety issues around AI. The company has also been holding investor meetings in New York this week as it sounds out interest for a potential overseas junk bond sale, which people familiar with the matter previously said could raise $10 billion to $20 billion. Vision Fund 2 has made more than 300 investments since inception, and has recently been plowing more into ChatGPT creator OpenAI.
The Japanese conglomerate has committed to invest $64.6 billion in OpenAI, whose Chief Executive Officer Sam Altman recently said a long-anticipated initial public offering is still in the works but would not happen this year, as some investors had expected. The firm pushed the IPO to 2027 as it focuses on addressing safety issues. SoftBank has been using that stake to obtain liquidity; in August it raised a $10 billion loan backed by its OpenAI holding from lenders including Apollo.
The financing for Softbank’s Vision Fund 2, which had more than $100 billion of committed capital as of February, counts SoftBank’s billionaire boss Masayoshi Son and SoftBank itself as the largest investors.
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