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A Japanese giant looks to Switzerland

A Japanese giant looks to Switzerland

Tokyo (SCCIJ) – The Japanese technology investor Softbank Group has invested 5 billion dollars in Roche Holding from Basel, one of the world’s largest pharmaceutical companies. It was not the first time that the Japanese investor has shown a keen interest for deals in Switzerland. After all, the country is well-known for excellent financial assets and services.

A Japanese giant looks to Switzerland

Masayoshi Son, the founder and CEO of Softbank Group, likes to invest in Switzerland (© Softbank Group).

Start-up support

A successful investment of the Japanese group in Switzerland has been Roivant Sciences. The biotech group from Basel collects drug candidates discarded by other pharmaceutical developers for commercial reasons or with potential in untested areas. The group directs investments into several subsidiaries specializing in one research area.

Softbank led the 1.1 billion dollars financing round for Roivant Sciences in 2017. Two years later, Japan’s Sumitomo Dainippon Pharma acquired five Roivant subsidiaries for 3 billion dollars and 10% of the parent company. This May, Roivant was merged with the U.S. investment company Montes Archimedes which is listed on the Nasdaq stock exchange. Both Japanese investors may have benefited considerably from Roivant’s Nasdaq listing.

Keen on Swiss Re

After the move into Roivant Sciences Softbank demonstrated further interest in Swiss assets. In 2018, the Japanese investor planned to acquire a minority stake in Swiss Re, the largest reinsurance company worldwide and headquartered in Zurich. At that time, according to unconfirmed reports, Softbank was negotiating to buy up to one-third of Swiss Re’s shares for 10 billion dollars or more. This would have made the Japanese investor by far the largest shareholder. Analysts argued that Softbank wanted to utilize the vast data treasure of Swiss Re in auto insurance. But in the end, the plan did not materialize.

Another Softbank venture into Switzerland was a multi-billion-dollar business connection with Credit Suisse Group. Some Softbank portfolio companies received loans via supply-chain funds at Credit Suisse, while Softbank was also an investor in the Credit Suisse funds. But the partly controversial ties are now dissolved.

Roche as tech stock?

The Roche shares were bought by Softbank Group’s trading arm SB Northstar. The amount of 5 billion dollars was equivalent to 1.5% of the market capitalization. Bloomberg News argued that Roche’s U.S. subsidiary Genentech relies on big data analysis with artificial intelligence to discover and develop new drugs. In other words, the tech investor Softbank would view Roche as a tech stock.

But the explanation for the move could be simpler. The head of SB Northstar, Akshay Naheta, an ex-trader at Deutsche Bank, may be trying to take advantage of Roche’s complicated shareholding structure. Entry into the Swiss company is possible either through 160 million bearer shares or 703 million non-voting participation certificates.

The founding families of Roche control 50% and the company Novartis 33% of the shares, leaving only 17% worth Fr. 1 billion freely tradable. Therefore, Softbank is likely to have bought a mixture of shares and certificates, according to the Swiss Bank Vontobel, to take advantage of their different market prices.

Text: Martin Fritz for SCCIJ

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