Report: Apollo (APO.US) is considering increasing SoftBank loan to 9 billion USD to support OpenAI investment

According to information obtained by Zhihui Finance APP, sources reveal that Apollo Global Management (APO.US) is in discussions with SoftBank Group (SFTBY.US), planning to increase the loan size from $5.4 billion to $9 billion to help the Japanese company ramp up its bet on AI giant OpenAI. Sources say that the financing is secured by assets from the SoftBank Vision Fund II, and the final loan amount has yet to be determined.

Apollo provided a so-called net asset value (NAV) loan to SoftBank’s venture fund in 2021, and added another $900 million last year, raising the loan size to $5.4 billion.

SoftBank has become one of the world’s largest investors in artificial intelligence, putting its various borrowings under close scrutiny. As concerns over AI safety mount, the cost of credit risk insurance on SoftBank’s debt continues to rise, with its credit default swaps (CDS) reaching a three-year high this week.

Since its inception, Vision Fund II has made over 300 investments, and recently has been allocating more capital to ChatGPT developer OpenAI.

The Japanese conglomerate has committed to invest $64.6 billion in OpenAI. OpenAI CEO Sam Altman recently stated that the long-anticipated IPO is still being prepared, but will not take place this year as some investors had expected. The company has postponed its IPO to 2027 to focus on addressing safety issues.

SoftBank has been leveraging its stake to gain liquidity; in August this year, it raised a $10 billion loan from lenders including Apollo, using its OpenAI stake as collateral.

As of February, Vision Fund II’s committed capital exceeded $100 billion, with its largest investors including SoftBank founder Masayoshi Son and SoftBank itself.