Softbank Didn’t Lose a Penny When Investing $1Bil in Wirecard. How did that work?

How did SoftBank appear to invest a billion dollars in Wirecard without losing a penny? The trick is that they didn’t put in any money at all. Not only that, but Softbank employees profited from the trade without Softbank itself profiting. WDI.DE

This is a follow up to my earlier video on Wirecard: https://youtu.be/tVBCXSrk8fs

When Warren Buffett invests in a company, that the company’s stock goes up, because other investors mimic Warren Buffett and buy the stock too. This is type of thing is often referred to as a “halo effect.”

In Silicon Valley, SoftBank has its own halo effect, when Softbank puts money into a company, they are known for introducing the company to their other portfolio companies, creating a virtuous cycle that other investors might want to come along for.

What SoftBank appears to have done with their wirecard investment is monetize their halo effect, separate it out from any long term investment returns and simply profit from any pop in valuation from their reputation and stamp of approval from having selected Wirecard.

SoftBank never actually put any money into Wirecard according to Bloomberg. Instead, SoftBank facilitated a $1 billion convertible bond deal for the German digital payments company without investing any cash.
The trade managed to monetize the SoftBank investment halo, but SoftBank itself didn’t make any money off of it. Senior executives at SoftBank profited from this trade along with the government of Abu Dhabi. SoftBank is now trying to distance itself from Wirecard, now that the German payments company has gone bust. They are seeking to terminate their five-year partnership formed with Wirecard in April 2019, according to a Bloomberg article.

If a business is careless with its reputation it can end up losing it.
Let me know in the comments below what you think of this SoftBank trade and of Credit Suisse’s involvement?
Patricks' Books:
Statistics for Traders: https://amzn.to/3eerLA0
Derivatives: https://amzn.to/3kwsPSr
Corporate Finance: https://amzn.to/3fn3rvC

Visit our website: www.onfinance.org
Follow Patrick on Twitter Here: https://twitter.com/PatrickEBoyle

Patreon Page: https://www.patreon.com/PatrickBoyleOnFinance

Видео Softbank Didn’t Lose a Penny When Investing $1Bil in Wirecard. How did that work? канала Patrick Boyle