Exclusive: US Approves $ 2.25 Billion SoftBank Investment in GM-Supported Cruise

(Reuters) – Cruise, an American auto-driven vehicle company majority-owned by General Motors, told Reuters on Friday that a US national security group had approved a $ 2.25 billion investment from the Japanese company SoftBank Corp.

The United States is increasingly being watched by SoftBank for its links with Chinese companies in the face of escalating trade and technology warfare between Washington and Beijing. He is raising his second $ 100 billion investment vehicle, called Vision Fund, after deploying his first vehicle of equal size.

The US Foreign Investment Committee (CFIUS), which examines transactions for potential national security concerns, has approved this investment based on new assurances that Cruise's technology would be completely banned at SoftBank, a statement said. source close to the folder.

A spokesman for SoftBank declined to comment. The Treasury Department, which heads CFIUS, did not immediately respond to a request for comment.

The approval releases a seat for SoftBank on Cruise's board, formalizing its oversight and cementing Cruise's key financing, which has raised $ 7.25 billion of capital since last year, announced society.

"Today's news is another important step in realizing our goal of developing and deploying large-scale autonomous vehicles," Cruise Chief Executive Officer Dan Ammann told Reuters.

However, approval of the agreement did not always seem certain, as two companies close to the agreement had examined it closely.

The $ 2.25 billion investment was unveiled by SoftBank in May 2018 in the midst of a wave of investment from the Japanese conglomerate of technology and telecommunications in the areas of intelligence artificial, data analysis, financial services and autonomous cars.

RED FLAGS

The investment has drawn CFIUS attention to red flags, as SoftBank invests in many mobility units, some of which are based in China, and encourages the companies in which it invests to share information.

CFIUS was particularly concerned about SoftBank's joint investment with Tencent Holdings Ltd, a Chinese giant of social media and gaming, and its investment in the Chinese company Didi, which it feared could not use Cruise's technology. indicated sources.

The committee, reinforced by a law last year to strengthen the inter-agency group, has been increasingly firm against Chinese companies, while Beijing and Washington remain stuck in a commercial and technological stalemate.

Reuters has announced that the Chinese game company Beijing Kunlun Tech Co Ltd was looking to sell Grindr LLC, the popular gay dating app, after CFIUS said its property posed a risk to national security. CFIUS suspended last year the proposed acquisition of MoneyGram International Inc. by Ant Financial, owned by the chairman of the Chinese Internet conglomerate Alibaba.

The cruise agreement has been structured to allow the down payment of $ 900 million of investment, the remaining balance being provided when the cruise AVs are ready for commercial deployment and depend on the 39, regulatory approval. The two tranches combine to give SoftBank a nearly 20% stake in Cruise.

However, the Japanese company has separately announced a $ 1.15 billion joint investment with GM, T. Rowe Price and Honda earlier this year, further strengthening its stake.

Softbank's investment, followed by Honda's October announcement of $ 2.75 billion in Cruise, remains one of the largest and most prominent investments in driver technology. autonomous.

Its Vision Fund, the largest technology fund in the world, announced in February a $ 1.5 billion investment in the Chinese group Chehauduo, the largest platform for used cars, in February. Reuters announced in December that the same fund was recruiting a China-based investment team to strengthen its presence in one of the world's most dynamic technology markets.

This is not the first time that SoftBank has been subjected to a prolonged examination of the CFIUS. It had to accept restrictions imposed by the United States on the management of some of its companies, including wireless carrier Sprint Corp and investment firm Fortress Investment Group.

SoftBank lost its claim to two seats on the board of directors of Uber Inc. when the reality-TV giant entered the stock market in May. CFIUS has never allowed SoftBank to sit on the board as a result of the agreement reached in 2017 to invest $ 9 billion in Uber.

The autonomous vehicle industry could revolutionize transportation but it faces engineering, safety and regulatory issues, as well as skepticism from potential users.

Waymo companies of GM Cruise and Alphabet Inc. are often described as technology leaders and automakers competing to create autonomous cars and integrate them into fleets of transportation services.