Has SoftBank Taken Activist Lessons From Elliott?

Unicorns used to be the almost exclusive focus of SoftBank Group Corp. But now hedge funds are entering Chief Executive Officer Masayoshi Son’s backyard, chasing these billion-dollar plus tech startups in droves. As the competition heats up, can SoftBank retain its edge in venture capital? Could it change its investing style to stock picking or perhaps even activism?

The questions arose when it became known SoftBank had built a $5 billion stake in Roche Holding AG, as Bloomberg News reported. It’s a curious move. SoftBank is now one of the largest investors in the highly undervalued Swiss pharmaceutical giant, whose Genentech division is a pioneer in the data-driven development of drugs with the aid of artificial intelligence. Combined with smaller stock investments made earlier, the Japanese VC giant could well become a market mover in the sector — the new biotech whale. Is that what SoftBank wants to do?

Might Masa Son be trying activism? Is this a campaign to get Roche to unleash its pent-up value? Son could have gotten a few tips from Paul Singer’s Elliott Management Corp. Last year, the venerable activist hedge fund launched an aggressive campaign to nudge SoftBank itself to boost share price via asset sales and share buybacks. The way Roche is set up, however, will make that difficult for SoftBank. The drug maker has a dual-class share structure with the founding families owning 50.1% of the voting class, while crosstown rival Novartis AG holds one-third.