SoftBank fund puts $2.25 billion in GM’s driverless unit
NEW YORK — A fund affiliated with SoftBank Group of Japan plans to invest $2.25 billion in General Motors’ driverless-technology division to help the automaker ramp up a ride-hailing service and other new businesses.
As part of the deal announced Thursday, GM said it would put an additional $1.1 billion of its own money into the unit, known as GM Cruise Holdings. SoftBank’s investment will be made through its Vision Fund, which focuses on the technology sector.
“Our Cruise and GM teams together have made tremendous progress over the last two years,” Mary T. Barra, GM’s chairman and chief executive, said in a statement. “Teaming up with SoftBank adds an additional strong partner as we pursue our vision of zero crashes, zero emissions, and zero congestion.”
The news caused GM shares to rise nearly 13 percent, to $42.70.
Earlier this year GM sought permission from the US Department of Transportation to begin operating fully autonomous cars — without steering wheels or pedals — in a commercial ride-hailing service in 2019.
On Thursday, Barra said the agreement with SoftBank would give GM the capital it needs to introduce self-driving cars at a large scale.
The investment highlights the outsized ambition and seemingly bottomless wallet of SoftBank and its founder, Masayoshi Son. It was Son who came up with the idea of raising nearly $100 billion from investors ranging from Saudi Arabia to Apple for the Vision Fund, which instantly became one of the world’s biggest and boldest investors in tech companies.
In a reflection of Son’s personality, SoftBank and the Vision Fund have become known for moving quickly to invest in companies whose products it sees as crucial to the future of technology. Such is that swiftness — rivals have derided it as aggressiveness — that SoftBank is often willing to pour huge sums into early startups at enormous valuations, crowding out other potential investors in the process.
That was at play in Thursday’s deal. SoftBank’s investment valued the business at more than $11 billion — well above the roughly $1 billion that GM paid to acquire the startup two years ago.
With the GM Cruise investment, SoftBank has pressed further into the automotive field, which it has already tackled from different angles. Its last direct investment into an autonomous-driving startup was last year, when it was co-leader of a financing round for Nauto, a maker of sensors for autonomous vehicles.
But it has also invested in a number of companies whose offerings touch the auto industry in other ways. Ride-hailing has been a major focus, with investments in Uber, Didi Chuxing of China, Ola of India, Grab of Singapore, and 99 of Brazil.
There have also been investments in Auto1, a German car-dealer service, and Mapbox, a mapping startup. And taking aim at semiconductor companies that are making chips for self-driving cars, SoftBank bought ARM and invested in Nvidia.
The SoftBank investment in GM Cruise will give the fund a 19.6 percent stake in the business. The Vision Fund fund will make an initial investment of $900 million, and a second tranche of $1.35 billion when Cruise’s self-driving vehicles are introduced for commercial use.
“We are very impressed by the advances made by the Cruise and GM teams, and are thrilled to help them lead a historic transformation of the automobile industry,” Michael Ronen, managing partner of SoftBank Investment Advisors, said in a statement.