SoftBank Internet Arm Plans NFT Fund to Grow Global Footprint

(Bloomberg) — SoftBank Group Corp’s Z Holdings Corp unit is betting on non-fungible tokens and PayPay to drive growth as it invests aggressively to expand its global presence.

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SoftBank has integrated Line Corp. , one of Asia’s most popular messaging apps, and Yahoo Japan last year to create an e-commerce and social media giant to compete with global tech leaders. Expanded company Z Holdings is now planning to launch the NFT market in 180 countries this spring and is spending big to double the users of its PayPay fintech unit to 90 million, according to the company’s chief executive.

Web3 has become an umbrella term for a growing list of blockchain-based applications such as cryptocurrencies, exchanges, decentralized finance, and NFT trading. It has been hugely popular with the support of celebrity backers and venture capitalists like Andreessen Horowitz. Z Holdings, which generates the bulk of its revenue through mobile advertising and spending, is keen to expand by tapping into a five-year budget of about 500 billion yen ($4.3 billion) for growth initiatives.

“Web3 can herald a world where life is completely different and we don’t want the company to miss out on the huge growth opportunity,” said Kentaro Kwabe, co-CEO of Z Holdings, in an interview. “We will not hesitate to do M&A deals to strengthen our presence.”

The company will be among the first to adopt NFT trading in Japan, following the launch of Rakuten Group Inc. In February for the NFT Market that focuses on music and anime content. Web3 investor and content developer Animoca Brands said it plans to enter the Japanese market through its NFT business and open a local office in April.

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PayPay, a QR code-based smartphone payment service, is one of SoftBank’s most successful investments, built in collaboration with Paytm in India. Initially driven by massive spending on consumer lure, PayPay is expected to be another growth pillar for Z Holdings. While the focus for now remains on increasing the number of users, Kwabe said he hopes to turn the business into profitable over the next few years.

The executive said the company’s thinking about bringing the PayPay business to the public is “extremely flexible.” There is no current plan for an initial public offering and Z Holdings may choose to keep the unit private, depending on business conditions.

Kwabe’s comments mirror those made previously by Junichi Miyakawa, CEO of SoftBank Corp., which owns 25% of PayPay. The SoftBank Group owns 50% of PayPay, while Yahoo Japan owns the remaining 25%. SoftBank sees potential for growth beyond the existing 45 million PayPay users, which already covers more than half of all smartphone users in Japan, Miakawa said during an earnings call in February. He said the number of payments is the company’s “most important” performance measure.

Z Holdings may be on track to meet its medium-term goal of 2 trillion yen in sales by fiscal year 2024, as the Line merger helps drive ad monetization, Bloomberg Intelligence analyst Ian Ma wrote in a note. This could further enhance the company’s goal of becoming the best Japanese e-commerce platform in terms of transaction value in the coming years. “While ZHD’s goal of becoming an e-commerce leader in Japan in early 2020 appears challenging, it may benefit from untapped online demand where offline purchases remain the majority.”

So far, the most significant changes to the Web have been mainly made by US heavyweights, but “we’d like to find a way to do it ourselves,” Kwabe says.

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