SoftBank Vision Fund posts $7.2bn loss on tech writedowns

Japanese group's pipeline of asset sales that may fund future buybacks include UK online shopping group THG, UK network provider Pelion IoT, and distressed-debt specialist Fortress Investment

A mobile shop for Japan's SoftBank in Tokyo. AFP
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SoftBank Group’s core Vision Fund arm posted a $7.2 billion quarterly loss as plunging start-up valuations continue to hammer the company’s financial performance.

The Vision Fund segment lost 1.02 trillion yen in July-September, following a 2.33tn yen loss in the June quarter.

Overall, the Japanese conglomerate logged net income of 3.03tn yen in the last quarter, buoyed by the disposal of a chunk of its Alibaba Group stake. The company said its total profit on its disposal of Alibaba shares was 5.37tn yen.

Billionaire founder Masayoshi Son turned his telecom company into the world’s biggest start-up investor, aiming to repeat his early success in backing the Chinese e-commerce pioneer. But the effort has been plagued by missteps and, more recently, a sharp downturn in technology valuations.

SoftBank has been struggling with declines on public investments, with the Vision Fund recording net valuation losses totalling 1.19tn yen on its public holdings in the quarter just ended. Of those, China’s SenseTime Group accounted for 364bn yen, while US food delivery firm Doordash accounted for 225bn yen and Indonesian ride-hailing and e-commerce firm GoTo Group 108bn yen, it said.

SoftBank also holds a stake in the, though it’s declined to explain its exposure even as the crypto exchange’s co-founder Sam Bankman-Fried says he may file for bankruptcy.

“I don’t think anyone can conclusively say that markets have bottomed,” said Kirk Boodry, an analyst at Redex Research.

Mr Son and SoftBank have been trying to wait out the slump, selling off shares in Alibaba and Uber Technologies Inc. to raise cash and shore up its balance sheet.

Much of its future investment strategy hinges its ability to make good on its $32bn purchase of chip designer unit Arm, and take it public next year.

Chipmaker sentiment has soured drastically in recent weeks, putting the onus on Arm’s finances to make any initial public offering successful.

After making introductory remarks, Mr Son plans to hand over the earnings call to his chief financial officer Yoshimitsu Goto, to focus on Arm’s operations, SoftBank said.

As attention turns to SoftBank’s balance sheet, SoftBank has been hurrying to offload assets to bolster its bottom line and fund a share repurchase spree that has vaulted its share price more than 40 per cent since the start of this quarter.

The accelerated pace of its stock buybacks has sparked renewed speculation that Mr Son may lead a management buyout of SoftBank — something that he has talked internally about, Bloomberg News has reported.

Beyond Alibaba, SoftBank’s pipeline of asset sales that may fund future buybacks include UK online shopping group THG, UK network provider Pelion IoT, distressed-debt specialist Fortress Investment Group and Indonesian ride-hailing and e-commerce firm GoTo Group, said Bloomberg Intelligence’s Marvin Lo.

Updated: November 11, 2022, 8:11 AM