Telecommunications and internet group SoftBank is set to raise roughly half its target for its second Vision Fund, the Wall Street Journal reported on Friday citing people familiar with the matter.
SoftBank announced in July 2019 it had organised memoranda of understanding for $108bn of capital for Vision Fund II, set to follow the $98.6bn first fund it set up in 2016.
However, the eventual size of the vehicle could be less than half that, with SoftBank itself committing most of the money, the sources said. SoftBank has established a hedge fund and is considering one-off deals with fund investors who would collaborate in pinpointing deals.
Team members are also beginning to depart from SoftBank Investment Advisers, the entity that manages Vision Fund.
Managing partner Michael Ronen is negotiating leaving terms and job cuts are reportedly on the horizon. Others will move from Vision Fund’s headquarters in the UK to Abu Dhabi, the home of Mubadala, the sovereign wealth fund that provided $15bn for the first Vision Fund.
Although Vision Fund has built up a substantial portfolio, some of its bigger bets have not paid off. Workspace provider WeWork failed to go public in the autumn, leading to a $9.5bn rescue package from SoftBank, while Uber and Slack’s shares continue to trade below their IPO price.
The pressure to generate a profit has reportedly led to Vision Fund urging portfolio companies to cut expenses. Several portfolio companies, including WeWork, Uber, Oyo, Rappi, Fair.com, Flexport, Wag and Zume, have recently announced layoffs of differing size.
Investment bank Goldman Sachs, financial services firm Standard Chartered and Asian insurers including Dai-ichi Life – all of which were named in the July announcement – are unlikely to back Fund II according to people familiar with the matter.
Mubadala and Saudi Arabia’s Public Investment Fund, which supplied $45bn for the first fund, have said they will only be willing to commit profits generated from the original Vision Fund into its successor.
