Block Trade – SoftBank and Goldman –

At the end of May this year, Godman Sachs supported SoftBank Group (“SBG”) in completing a block trade for asset liquidation. SBG sold approximately JPY 300 billion (USD 2.8 billion) of their subsidiary’s (SoftBank Corp.) shares for financing purpose.

This, the largest block trade in the history of the Tokyo market, was managed and executed in the middle of the COVID-19 crisis by all parties involved through communication platform such as Zoom, “chat” and others on a fully remote basis. It’s reported that it was the first time for Goldman to execute a fully remote brock trade.

In a brock trade, securities firms undertake a large number of shares and subsequently  distribute them to a number of institutional investors, outside of the open market, minimizing the impact on the stock price. In the process various risks exist, which could lead to an inability to sell shares by the securities firms. If these risks emerge, the securities firms end up holding a large portion of the shares by financing themselves, managing their liquidity risk.

From a financing standpoint of securities firm, Goldman committed to providing JPY 300 billion for SBG, managing both its liquidity risk and the ability to sell the shares to the investors.