SoftBank Group is in talks with global banks to borrow around $5 billion using shares in its chip designer Arm Holdings PLC (NASDAQ:ARM) as collateral, according to a report by Bloomberg.
The loan, known as a margin loan, allows a borrower to secure cash against the value of assets such as stocks. If the share price falls too far, the lender can demand extra collateral or sell the pledged shares to cover the loan.
SoftBank is reportedly planning to use the capital to increase its investment in OpenAI, the artificial intelligence company behind ChatGPT. The move underlines founder Masayoshi Son’s renewed focus on AI, which he has described as central to the firm’s future growth strategy.
The talks come as Arm’s market value has soared since its listing last year, giving SoftBank more leverage to raise funds without selling its stake outright.
Listed at $51 a share in 2023, stock in the UK-founded microprocessor group is now changing hands for over $170.