Japan-headquartered internet and telecommunications firm SoftBank revealed today a ¥3.5 trillion ($27.4bn) loss in its Vision Funds for the financial year ended on March 31.
The figure represents the largest loss since the first Vision Fund formed in 2017, and the investment vehicles will adopt a “defensive” approach and decelerate their dealmaking pace this year, according to SoftBank founder and chief executive Masayoshi Son.
Vision Funds’ performance resulted in a ¥1.7 trillion ($13.12bn) annual loss for SoftBank Group, whose shares closed down 8% on the Tokyo Stock Exchange today.
SoftBank Vision Funds have some 450 portfolio companies, having completed 43 deals in the fourth quarter. Valuations of portfolio companies were down sharply, contributing to the loss, including Singapore’s Grab, South Korea’s Coupang, and Uber and DoorDash in the US .
In addition, Beijing’s tech crackdown efforts lowered the share value of SoftBank’s holdings in China including ride hailing app Didi Chuxing and e-commerce firm Alibaba.
Son signalled that SoftBank would be decreasing its investments in China. “It’s not that we won’t be investing in China at all as there are some great companies there, but we want to be investing smaller amounts,” he said.
Amir Anvarzadeh, Japan stock market strategist at Asymmetric Advisors, told the Financial Times: “We suspect SoftBank is having notable capital constraints that could only get worse should this market correction continue.”
In his earnings presentation today, Son mentioned global markets have been in a chaotic situation caused by factors including the Russian invasion of Ukraine and Shanghai’s harsh covid-related lockdown measures.
Son added that SoftBank intends to float Arm – the UK-headquartered semiconductor designer the corporate purchased for about £24bn ($32bn) in 2016 – on the Nasdaq stock exchange and will continue to hold a majority stake in the company post-IPO.
Chipmaker Nvidia had agreed in 2020 to buy Arm for $40bn, in what would have been the largest acquisition in the semiconductor industry, but the deal fell through because of regulatory challenges.
Image courtesy of SoftBank Group Corp.
