SoftBank 9984 1.56%
Group Corp plans to invest $ 900 million in Pacific Biosciences PACB gene sequencing company 2.30%
from California Inc., while the Japanese technology conglomerate intensifies a new effort to invest in public stocks.
PacBio, as it is known, produces state-of-the-art DNA sequencing systems, used to research diseases and develop treatments. The investment, in the form of convertible debt, aims to help accelerate the commercialization of the company’s technology, SoftBank 9984 1.56%
and PacBio plan to announce Wednesday.
It comes at the top of a 6% stake in PacBio that SoftBank had already accumulated and will give the Japanese investor significant control over the Menlo Park, Calif. Company.
PacBio has a market value of $ 7.4 billion, after a dramatic jump in its shares in recent months, caused in part by a new joint venture with Invitae Corp., a medical genetics company. PacBio, whose shares have risen 11-fold since July, also brought in a new management, including an chief executive.
SoftBank,
best known lately for making large investments in private technology companies from a $ 100 billion fund, it has been retrofitting, selling large stakes and repurchasing shares. It also increased its focus on publicly traded companies. PacBio’s investment will be made through SoftBank’s newly established asset management arm, SB Northstar, which invests in listed technology companies.
The unit recently placed bets on companies like Kahoot, a Norwegian online educational games platform, and Sinch, a Swedish company that helps companies communicate with customers using cloud-based tools. Both have been on the rise since SoftBank invested.
SoftBank has just announced a record $ 100 billion quarter for Vision Fund and an overall net income equivalent to about $ 11 billion.
SB Northstar reported an investment loss of nearly $ 1.6 billion, but SoftBank Chief Executive Masayoshi Son said in an investor conference call that he is now making gains. The unit, in which Son has a one-third stake, caused a sensation last year by making a big bet that the stock prices of some major technology companies would rise.
PacBio’s investment is part of SoftBank’s plan to expand its portfolio of biotechnology and life sciences companies, said people familiar with the strategy. SoftBank recently invested in the initial public offerings of six American life science companies, these people said.
About a year ago, PacBio’s biggest competitor, Illumina Inc.
canceled plans to acquire the company in a $ 1.2 billion deal that was announced in November 2018. Illumina said it was backing down after disputes from the Federal Trade Commission.
Illumina paid PacBio a separation fee of $ 98 million. But under the agreement, if PacBio later raised more than $ 100 million, it owed Illumina $ 52 million. PacBio will now have to pay that amount.
“We believe that PacBio’s [technology] it will be the de facto standard tool for population genomics, fundamentally changing healthcare practice, ”said Akshay Naheta, CEO of SB Management, who manages the Northstar portfolio.
This will also allow PacBio to reduce the price of its systems, which should lead to faster deployment, said recently appointed PacBio CEO Christian Henry in an interview. He called SoftBank’s investment “a transformational transaction”.
Write to Maureen Farrell at [email protected]
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Published in the print edition of February 10, 2021 as ‘SoftBank Bets on Biotech Star’.