SoftBank Group Corp. told shareholders today that it plans to put $41 billion worth of assets on the auction block to help pay down debts and boost its share price.

The announcement achieved the intended effect, sending the Japanese tech behemoth stock soaring more than 18% in trading. But the real test will be how SoftBank’s shares perform in the coming weeks and months. 

Tokyo-based SoftBank is one of Japan’s largest wireless carriers and also a major tech investor. At the turn of the millennium, the company bought a $20 million stake in then-startup Alibaba Group Holding Ltd. that is now worth more than $100 billion. SoftBank is also set to own 24% of the entity that will emerge from T-Mobile USA Inc.’s ongoing merger with Sprint Corp., while its Vision Fund has invested about $100 billion into startups over recent years.

SoftBank is looking to sell off some of these assets because its share price has plummeted in recent weeks as part of the global stock decline brought on by the coronavirus pandemic. Additionally, activist hedge fund Elliott Management Corp. has reportedly been pushing the company’s leadership to initiate a large share buyback program.

Raising new capital would also help SoftBank pay down some of its considerable debt. The company and its assorted subsidiaries owe about $173 billion on a consolidated basis. 

SoftBank didn’t specify which assets will be put up for grabs as part of the plan. But the company did tell shareholders what it plans to do with the $41 billion from the sale: The company wants to use $23 billion to pay down debts and build up cash reserves, while up to $18 billion would go toward buying back shares. The planned buyback comes on top of a $4.5 billion stock repurchase program SoftBank unveiled earlier this month.

In total, the company could end up purchasing up to $23 billion worth of shares, which according to the Wall Street Journal would work out to as much as 45% of its outstanding stock. The fact that the announcement of the asset sale plans this morning sent SoftBank soaring suggests the initiative has the support of quite a few shareholders.

But others are less optimistic about the company’s roadmap. S&P Global Ratings LLC downgraded SoftBank’s credit rating outlook this month and an influential investment firm has shorted its stock.

SoftBank’s next moves will be closely watched in Silicon Valley. Through its Vision Fund, the Japanese company is a major investor in Uber Technologies Inc. and numerous other prominent tech startups with high valuations.

Photo: SoftBank