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SoftBank and Wirecard: a questionable partnership

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Miguel A. Rodriguez
Miguel A. Rodriguez
14 September 2020
SoftBank was cautious when partnering with Wirecard.

Last Friday, we discussed how the German Wirecard could probably be the victim of fraud since the company allegedly can't justify almost $2 billion.  

In just a few days, things took a turn for the worse, and now, in a statement released today, the company will file for insolvency at the district court in Munich. Moreover, SoftBank, which is in attention due to selling part of its stake in T-Mobile to increase its cash reserves, came again in the spotlight, after it has been found out that it had invested in Wirecard. 

Last year, the Japanese conglomerate invested $1 billion in April 2019 in the European company, in order to create an international partnership meant to facilitate digital payments.  The deal consists of convertible notes with a five-year maturity. When matured, the notes would have been a 6% stake for SoftBank. According to analysts, for SoftBank, the deal was made in a way that the conglomerate was out of any financial risk.  At that time, Wirecard’s numbers were good, and made its way through Germany30, based on data provided by BaFin. 

As reports showed, the $1 billion financing came not from SoftBank itself as the balance sheet revealed, but from personal pockets of SoftBank executives, and the Mubadala sovereign wealth fund. On paper, they would be impacted by the latest events.  

Wirecard stock price fell more than 80% since the scandal hit the news. Based on the opinion of various specialists, the shares may be worthless.

Sources: marketwatch.com, cnbc.com, finance.yahoo.com


This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.