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The article plays on the cultural anathema to the word debt in the following ways: It mentions specific interest rates only once, which are paid to a subset of
by gammateam 8y ago
The article plays on the cultural anathema to the word debt in the following ways:
It mentions specific interest rates only once, which are paid to a subset of investors in the vision fund. It briefly clarifies how none of this is an insane level of debt, just a large number.
It then spends the rest of the article talking the existence of bonds and interest bearing securities, with no distinction of what they are except "hey look, a DEBT security"
It mentions how it is as large as the public debt of a nation state, after qualifying the alarm with subsets of a subset of one of the entity's balance sheets.
By this part of the article, we are actually talking about the Softbank entity's "operating basis", which was a big pivot away from what 2/3rd of the article was talking about which was the Vision Fund doing all the cool investments.
Just.... be discerning.
The general counterpoint would be that it is great that a fund structured this way is trying to back illiquid private equity. It is nice that investors get the opportunity to have exposure to the hottest deal flow on the planet, with an entity that can push for liquidity.
- soVeryTired 8y ago> The general counterpoint would be that it is great that a fund structured this way is trying to back illiquid private equity. Sorry, I don't understand your point at all. Why would the fund's structure affect its investment mandate?
- gammateam 8y agoThey aren't mutually inclusive aside from the fact that nobody does it, for several good reasons. The investment mandate is written on paper and has nothing to do with the fund's structure. Nobody makes investment mandates with funds that are structured that way, except Softbank. Shrug emoji. Typically an investment into a fund is done with shares which bear no interest. This means that no money is being pulled away from the fund while it invests in things which cannot be liquidated. Softbank is investing in things which cannot be liquidated, all while money is flowing out of the fund to a large portion of shareholders at 7% a year.
- lquist 8y agoIt's a risky structure but Softbank continues to hit it out of the park with bets at a size that nobody else can match. Also the positions can be liquidated it just takes time
- staticautomatic 8y agoI sense there may be a clear point here somewhere but you've failed to state it.