NVTA Invitae Corporation

By Maureen Farrell 

SoftBank Group Corp. plans to put $900 million into red-hot gene-sequencing company Pacific Biosciences of California Inc., as the Japanese technology conglomerate ramps up a new public-equity investing effort.

PacBio, as it is known, produces next-generation DNA-sequencing systems used to research diseases and develop treatments. The investment, in the form of convertible debt, is designed to help accelerate the commercialization of the company's technology, SoftBank and PacBio plan to announce Wednesday.

It comes on top of a roughly 6% stake in PacBio that SoftBank had already accumulated and will give the Japanese investor significant sway over the Menlo Park, Calif., company.

PacBio has a market value of $7.4 billion after a dramatic jump in its shares in recent months that was sparked in part by a new joint venture with Invitae Corp., a medical-genetics company. PacBio, whose shares are up 11-fold since July, has also brought in new management, including a chief executive.

SoftBank, best known lately for making big investments in private technology companies out of a $100 billion fund, has been retooling, selling off large holdings and buying back stock. It has also increased its focus on publicly traded companies. The PacBio investment will be made through SoftBank's recently established asset-management arm, SB Northstar, which invests in listed tech companies.

The unit has recently made bets on companies including Kahoot, a Norwegian online-educational-game platform, and Sinch, a Swedish firm that helps companies communicate with customers using cloud-based tools. Both are up since SoftBank invested.

SoftBank just announced a record-breaking quarter for the $100 billion Vision Fund and a net profit overall equivalent to about $11 billion.

SB Northstar posted an investment loss of almost $1.6 billion, but SoftBank Chief Executive Masayoshi Son said on an investor call that it was notching gains now. The unit, in which Mr. Son has a one-third stake, made waves last year when it placed a big bet that the stock prices of some large tech companies would go up.

The PacBio investment is part of SoftBank's plan to build up its portfolio of biotech and life-sciences companies, people familiar with the strategy said. SoftBank has recently invested in the initial public offerings of six U.S. life-sciences companies, these people said.

Roughly a year ago, PacBio's larger competitor Illumina Inc. called off plans to acquire the company in a $1.2 billion deal that was announced in November 2018. Illumina said it was backing away following challenges from the Federal Trade Commission.

Illumina paid PacBio a $98 million breakup fee. But under their arrangement, if PacBio raised more than $100 million subsequently, it would owe Illumina $52 million. PacBio will now have to pay that sum.

"We believe that PacBio's [technology] will be the de facto standard tool for population genomics, fundamentally altering the practice of health care," said Akshay Naheta, CEO of SB Management, which runs the Northstar portfolio.

It will also enable PacBio to lower the price tag for its systems, which is expected to lead to more rapid deployment, PacBio's recently named CEO, Christian Henry, said in an interview. He called the SoftBank investment a "transformational transaction."

Write to Maureen Farrell at maureen.farrell@wsj.com

(END) Dow Jones Newswires

February 09, 2021 20:52 ET (01:52 GMT)

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