By Liz Hoffman, Jenny Strasburg and Ryan Knutson
After SoftBank Group Corp. bought control of Sprint Corp. in 2013, the business went further downhill, losing ground to Verizon Communications Inc. and AT&T Inc. and running dangerously low on cash.
Within SoftBank, executive Rajeev Misra was working to limit the damage. The former derivatives trader helped design a series of deals, pledging Sprint's handset leases, network equipment and eventually some of its airwaves to raise billions of dollars in fresh debt and blunt fears the struggling wireless carrier was headed toward bankruptcy.
Now, Mr. Misra is a top lieutenant to SoftBank chief Masayoshi Son for the entrepreneur's next big thing: a $100 billion fund to invest in futuristic technologies like artificial intelligence, robotics and other "Jetsons"-like inventions.
Mr. Misra, who built Deutsche Bank AG's large credit-derivatives business in the last decade, is leading a crew of ex-bond traders and Wall Street salespeople helping Mr. Son raise and manage the SoftBank Vision Fund. Others include a trio of Deutsche and Goldman Sachs Group Inc. alums well-connected among Middle Eastern royals.
Their knack for financial structuring and ties to ultrarich investors are key as the 59-year-old Mr. Son reinvents SoftBank as an incubator of next-generation technologies.
The fund is set to launch in coming weeks with money from SoftBank itself, several Middle East sovereign-wealth funds, and Silicon Valley luminaries including Apple Inc., Qualcomm Inc. and Oracle Corp.'sLarry Ellison, The Wall Street Journal has reported.
Of course, the fund is Mr. Son's show. He is its sole "key man" -- a formal designation for a fund's top decision maker -- and has tapped some of his longstanding relationships in the technology world to fill its coffers.
Mr. Son also has a record as a technology investor, albeit owing more to gut than careful study. He famously decided to invest in Chinese entrepreneur Jack Ma five minutes after meeting him. That $20 million investment was valued at $58 billion when Mr. Ma's company, Alibaba Group Holding Ltd., went public in 2014.
But his empire building has hit its limits. SoftBank carries more than $100 billion in debt and "can't leverage too much anymore," Mr. Son told VentureBeat in October.
The Vision Fund gives him billions of dollars to expand further using other people's money. Not that there aren't practical challenges.
One is finding bargains as startup valuations have climbed. Indeed, many investors questioned whether SoftBank overpaid when it recently spent $32 billion to buy ARM Holdings PLC, which designs chips used in smartphones.
The fund, because of its large size, also will likely need to pursue large, mature companies in which returns are often harder to achieve. Sprint, for instance, has fallen behind T-Mobile US Inc. to become the smallest of the four national U.S. wireless carriers.
Another issue is structuring deals without taxing SoftBank's balance sheet, in which the fund's holdings will be consolidated.
Solving those problems will fall to a team of financial whizzes in London. About 15 analysts recently set up shop in the city's posh Mayfair district, a neighborhood thick with hedge funds and high-end tailors.
Mr. Misra, SoftBank's 54-year-old head of strategic finance, is an Indian-born, U.S.-educated cricket fan who was once Mr. Son's banker, structuring debt for his early telecom takeovers.
The son of middle-class parents in New Delhi, Mr. Misra earned engineering degrees from the University of Pennsylvania. He worked in the 1980s designing satellites at the Los Alamos National Laboratory in New Mexico, then was at a technology startup before going to Wall Street to join Merrill Lynch's trading desk.
He jumped to Deutsche Bank in 1996 among a wave of Merrill Lynch defectors, including the German lender's future chief executive, Anshu Jain.
Mr. Misra spent the next decade building Deutsche Bank's credit-trading desk into one of the most profitable on Wall Street. Interest in these new, increasingly complex financial instruments was surging, and Mr. Misra tested ideas that paid off, former colleagues said.
In the early part of the last decade, he started a unit to buy and repackage asset-backed loans, making Deutsche Bank an early player in what would become a $500 billion market for collateralized debt obligations, one of the most lucrative but ultimately toxic inventions of the age.
He was "a creative genius," said Martin Belvisi, a former Deutsche Bank trader. "We were ahead of the curve in product design."
Mr. Misra, who declined to be interviewed, struck colleagues as tireless, cool under pressure and quirky. He chewed seeds in meetings and chain-smoked long, thin cigarillos that he later swapped for electronic cigarettes.
He oversaw dozens of traders including Greg Lippmann, whose big bet in 2007 against the U.S. housing market was a defining trade of the era. It made Deutsche Bank about $1.5 billion in profit, offsetting mortgage-related losses elsewhere at the bank, a Senate subcommittee later found.
As the crisis hit, Mr. Misra left Deutsche Bank and later joined UBS Group AG to run its fixed-income business, then Fortress Investment Group LLC. In 2014, he reconnected with Mr.Son at the lavish Italian wedding of SoftBank former executive Nikesh Arora, according to attendees. Mr. Son wooed his old banker to SoftBank.
There, Mr. Misra and other executives, including Chief Financial Officer Alok Sama, have made even simple deals complex in pursuit of an edge. For example, rather than sell Alibaba shares to finance its takeover of ARM, SoftBank raised money based on the future value of those shares.
Already, Mr. Misra's Wall Street troops have played a role in the Vision Fund's birth, according to people familiar with the matter.
An early hire was Saleh Romeih, a Goldman executive who structured and sold the bank's deals to investors in the Middle East. Fluent in Arabic and Japanese, Mr. Romeih's responsibilities include acting as a liaison between the fund and sovereign-wealth funds.
Akshay Naheta, a former Deutsche trader turned hedge-fund executive, is overseeing a chunk of the fund's money that will go toward public stocks.
Meanwhile, Nizar Al-Bassam and Dalinc Ariburnu, who held senior roles at Deutsche Bank and Goldman, are advisers to the fund and have connected SoftBank to big investors. Last year, they helped introduce Mr. Son to the deputy crown prince of Saudi Arabia, which is contributing $45 billion to the effort.
Write to Liz Hoffman at email@example.com, Jenny Strasburg at firstname.lastname@example.org and Ryan Knutson at email@example.com
(END) Dow Jones Newswires
January 11, 2017 02:48 ET (07:48 GMT)
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