Activist investor Elliott Management has built a more than $2.5 billion stake in SoftBank, the conglomerate behind WeWork

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Reuters/ Steve Marcus

Elliott Management Corp., the firm founded by billionaire and activist investor Paul Singer, has built up a more than $2.5 billion stake in SoftBank Group, The Wall Street Journal reported Thursday, citing sources familiar with the matter.

SoftBank’s stock gained 3% Thursday. It also traded up as much as 7% in early trading Friday.

Elliott will push the Japanese holding company to make changes that could boost its share price, including improving its corporate governance and buying back $10 billion to $20 billion in shares, according to the report. SoftBank’s $100 billion Vision Fund has invested in popular tech companies such as Uber and Slack, and is the largest shareholder in China’s Alibaba Group.

SoftBank is one of the largest technology investors in the world. But lately, the group and the leadership of its founder, Masayoshi Son, have come under scrutiny since WeWork’s disastrous IPO failure last year. SoftBank was forced to write down the value of its stake by $4.7 billion, and the Vision Fund’s stake by $3.5 billion. Son himself said he exhibited bad judgment on the deal.

In November, SoftBank reported its largest quarterly loss ever. SoftBank’s share price now trades well below the value of the company’s holdings, one of the reasons for Elliott’s interest, according to the report. On Thursday, SoftBank’s market value was about $89 billion – much less than the $210 billion combined value of its stakes in Alibaba, Sprint, and its Japanese telecom business, The Journal reported.

Elliott, which has invested in SoftBank on and off for more than a decade, was also inspired to increase its stake in the Japanese company after the WeWork failure, The Journal reported.

The move from Elliott comes as SoftBank is raising money for its second tech fund, Vision Fund 2. The company fell short of the $108 billion it said it could raise last summer, and launched the fund with borrowed money, adding to its growing debt pile, according to the Journal.

SoftBank has declined less than 1% year-to-date through Thursday’s close.

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Markets Insider