Middle Eastern sovereign wealth funds Public Investment Fund (PIF) and Mubadala are considering reducing planned investments in telecommunications firm SoftBank’s second Vision Fund, Bloomberg reported yesterday.
SoftBank raised $98.6bn for the first Vision Fund and revealed memoranda of understanding for $108bn of contributions from prospective limited partners and its own cash reserves in July this year.
The LPs identified in the announcement did not include Saudi Arabia-owned PIF, which provided $45bn for the first Vision Fund, or Abu Dhabi-owned Mubadala, which committed $15bn, but reports suggested they were in talks to contribute to the second vehicle.
However, PIF intends only to put its profit from Vision Fund I into Vision Fund II, while Mubadala is cutting its commitment from $15bn to $10bn, according to people familiar with the talks.
The decision has been influenced by ongoing issues surrounding an initial public offering for workspace provider We Company, one of Vision Fund’s two biggest bets along with ride hailing service Uber.
Multiple reports have stated that We Company, the owner of WeWork, will likely float at a valuation of between $15bn and $20bn – down from a $47bn valuation in January this year – despite SoftBank potentially committing to buying some $750m of shares in the offering.
We Company postponed the proposed IPO yesterday, revealing in a statement that it plans to float by the end of 2019. It had been expected to price its shares for an offering that would raise between $3bn and $4bn next week.
The reduced valuation would in any case represent a considerable paper loss for Vision Fund. Although it has had some successes – notably Flipkart and Guardant Health – Uber is currently trading about 25% down from its IPO price in May while the performance of messaging platform Slack has also been lacklustre since its flotation in June.
