June 4, 2019 / 6:45 AM / 6 months ago

UPDATE 2-SoftBank Group to book 1.2 trln yen profit on Alibaba share sale

* SoftBank Group sold shares via derivatives in 2016

* Sale was to fund acquisition of chip designer ARM

* Alibaba is considering $20 bln HK listing -sources (Adds SoftBank Group's shares)

By Sam Nussey

TOKYO, June 4 (Reuters) - Japan's SoftBank Group Corp said on Tuesday it expects to book around 1.2 trillion yen ($11.12 billion) in pre-tax profit on the sale of shares in China's Alibaba Group Holding Ltd.

The sale dates from 2016 when SoftBank sold part of its Alibaba stake via derivatives to fund its acquisition of British chip designer ARM.

The transaction leaves SoftBank with a 26% stake in Alibaba worth $101 billion. The Japanese investment firm said it would book the profit in the financial quarter ending June.

SoftBank Group founder and Chief Executive Masayoshi Son bought into Alibaba for just $20 million in 2000. The Chinese startup's growth into one of the world's biggest e-commerce companies has helped burnish Son's tech investor credentials.

The windfall comes as one of Son's biggest tech bets, Uber Technologies Inc, has shown lacklustre stock market performance since its market debut last month.

SoftBank booked a 418 billion yen gain on its Uber stake in the financial quarter ended March ahead of the debut. On Monday, Uber's shares closed 9% below their IPO price at $41.

Son has referred to the value of the Alibaba stake to argue that SoftBank Group's shares are undervalued. Following the end of a 600 billion yen stock-buyback programme and Uber's disappointing listing, the shares have fallen 23% from their April high.

SoftBank Group shares closed down 3% on Tuesday ahead of the Alibaba sale announcement, giving the conglomerate a market capitalisation of 10.2 trillion yen.

New York-listed Alibaba is considering a follow-on share sale in Hong Kong to raise as much as $20 billion to boost its investment war chest, people familiar with the matter told Reuters last week. ($1 = 107.8800 yen)

Reporting by Sam Nussey; Editing by Christopher Cushing

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