SoftBank’s Vision Funds post $5.5bn investment loss
SoftBank’s signature Vision Funds have suffered a quarterly investment loss of $5.5bn as the technology conglomerate puts less money into start-ups to navigate a global tech rout and higher borrowing costs.
For the first time in decades, the group’s billionaire founder Masayoshi Son is not expected to deliver a presentation on Tuesday after his announcement last year that he would focus on listing the UK chip designer Arm.
In recent quarters, SoftBank has emphasised the group’s shift to a more “defensive” position, with its emphasis on retaining cash. The message is designed to reassure investors worried about the group’s borrowing costs with interest rates rising around the world.
“There remains significant unpredictability in the labour markets, future monetary policy road maps, as well as corporate earnings,” Navneet Govil, executive managing partner at SoftBank Global Advisers, said in an interview. “So our posture remains defensive and is focused on building resilience.”
As of the end of December, SoftBank said the fair value of the $100bn Vision Fund I was down 4.4 per cent from a year earlier due to markdowns in privately held companies despite gains in some listed holdings, such as ride-hailing groups Didi and Grab. The valuation for investments in Vision Fund II was down 6.2 per cent.
For the October to December quarter, SoftBank reported an investment loss of ¥731.94bn ($5.5bn), compared with a ¥1.38tn loss in the previous quarter for its two Vision Funds and a fund investing in start-ups in Latin America.
During the three months, one of the world’s biggest tech investors generated a ¥783.41bn net loss, which was sharply lower than analysts’ forecasts of a ¥103.59bn profit, according to S&P Global Market Intelligence.
In the previous quarter, the company had logged a massive ¥3tn net profit, but that was mainly a result of its historic selldown of its stake in Chinese ecommerce group Alibaba.
Kirk Boodry, an analyst with Redex Research, said it would probably take time for market perceptions on SoftBank and its Vision Funds to improve, making it difficult for them to expand investments in the near future.
“In order to be more proactive and aggressive with investing, they need money,” Boodry said. “The initial public offering of Arm is the quickest way for them to monetise, but beyond that, there is not a lot you can sell within the Vision Fund because many of the investments are underwater.”