Masayoshi Son’s AI ambitions outgrow SoftBank’s balance sheet

SoftBank’s $4bn acquisition of DigitalBridge will give Masayoshi Son a new way to bring outside investors into his vast AI ambitions, as the billionaire seeks to build infrastructure projects too large to finance from his conglomerate’s balance sheet alone.

Marc Ganzi, chief executive of the $100bn-plus digital infrastructure manager, said DigitalBridge would become SoftBank’s “third-party infrastructure arm”, raising money from institutional investors to finance data centres, power and other projects.

“As the zeros keep growing in terms of Masa’s ambition, he’s not going to be able to do it all off the SoftBank balance sheet,” Ganzi told the FT as SoftBank completed its takeover of DigitalBridge this week.

The deal comes as Son faces fresh complications in financing his sprawling AI strategy. SoftBank this month launched one of the largest-ever junk-bond deals to help fund its OpenAI investment.

Meanwhile, SB Energy, the SoftBank-controlled group tasked with building vast data centres for OpenAI, has slowed preparations for an initial public offering, while the ChatGPT maker has also delayed its own plans to list.

However, the completion of the DigitalBridge deal provides progress on SoftBank’s broader AI strategy. Ganzi said Son was seeking to control three layers of the AI “wedding cake”: large language models through SoftBank’s stake in OpenAI, chips through its ownership of Arm, and power and data centres through DigitalBridge.

“Power is the gateway to compute,” said Ganzi. “If you can’t control an electron, you cannot get to a token.”

DigitalBridge’s funds hold large stakes in data centre operators including Vantage, Switch and DataBank, as well as Zayo, one of North America’s largest independent fibre networks. SoftBank’s takeover valued DigitalBridge at about $4bn including debt.

“DigitalBridge remains independent in the sense that we’re not consolidated up into SoftBank,” said Ganzi. “We’ll be the third-party infrastructure arm of SoftBank that goes out and raises third-party capital and invests in projects.”

Ganzi said SoftBank would anchor DigitalBridge’s future funds, a similar arrangement to Brookfield Corp’s role in Brookfield Asset Management. “That’s absolutely the idea, to supercharge our fundraising,” he said.

In May, DigitalBridge also agreed to acquire power investor ArcLight Capital Partners.

Ganzi said the two companies would pass deals to each other, with SoftBank referring infrastructure and power opportunities to DigitalBridge while they referred private equity-type deals the other way.

“When we do find ideas that SoftBank has that are good and the returns are right, then we’re happy to back up the truck and invest with them and help run a co-investment syndication and amplify the capital for the balance sheet of SoftBank,” he said. “That is definitely something that’s down the road.”

But Ganzi cautioned that DigitalBridge’s dealmaking would remain at arm’s length from SoftBank. “We have an independent pool of capital that we need to invest, and we take that responsibility very seriously,” he said.

“We’re not going to put money into just a SoftBank idea, it’s got to be a really good idea, whether it’s SoftBank or not SoftBank. I really don’t care.”

For Ganzi, the sale to SoftBank marks his third major exit in three decades, after turning Colony Capital, a struggling real estate investor, into a $108bn digital infrastructure manager in just six years.

He previously sold Global Tower Partners to American Tower for $4.8bn in 2013 and Apex Site Management to SpectraSite in 2000, at the top of the telecoms bubble.

Asked whether the DigitalBridge sale was also timed at a market peak, Ganzi said: “It is a top. I think the top’s already happened . . . The days of data centres trading at 40 times [ebitda] are over.”

Ganzi warned that about half of the data centre leases signed this year would never be built due to hostile local zoning, reluctant utility regulators and tighter financing.

But he drew a line between frothy valuations and near-term permitting issues and the long-term value of such properties due to breakneck demand and the coming adoption of AI by industrial companies. “If people think we’re late in the process, we’re not,” said Ganzi.