Masayoshi Son now owes SoftBank $6.5 billion on side deals
Sign up now: Get ST's newsletters delivered to your inbox
Over the years, the Japanese billionaire’s controversial personal stakes in SoftBank’s investments drew fire from investors.
PHOTO: REUTERS
Follow topic:
Tokyo – Mr Masayoshi Son is now personally on the hook for about US$4.7 billion (S$6.5 billion) on side deals he set up at SoftBank Group to boost his compensation, after mounting losses in the company’s tech portfolio wiped out the value of his interest in the second Vision Fund.
Over the years, the Japanese billionaire’s controversial personal stakes in SoftBank’s investments drew fire from investors, who pointed to the mix of personal and company interests as a corporate governance concern. Mr Son – who holds a more than 30 per cent stake in SoftBank – has denied there was a conflict of interest and said it was remuneration for his investment experience, in lieu of investment fees.
The move has backfired, enveloping Mr Son’s personal finances in the downside of the world’s biggest tech investor’s bets. Mr Son was down more than US$4 billion on his side deals in the June quarter, Bloomberg News reported earlier.
Mr Son last week said he was stepping away from leading earnings calls to focus on preparing chip designer Arm for a public listing – an event that would give SoftBank fuel to again pursue new investments. SoftBank will bide its time in a tech winter and pay down its debt, he said.
SoftBank’s Vision Fund arm posted a US$7.2 billion quarterly loss last week, driven by the declining value of portfolio companies such as SenseTime Group, DoorDash and GoTo Group. The company has been selling off assets to raise cash and shore up its balance sheet, posting gains from selling a chunk of its stake in Alibaba Group Holding.
The 65-year-old Mr Son holds 17.25 per cent of a vehicle set up under Vision Fund 2 for its unlisted holdings, as well as 17.25 per cent of a unit within its Latin America (Latam) fund, which also invests in start-ups. He has a 33 per cent stake in SB Northstar, a vehicle set up at the company to trade stocks and derivatives.
Portfolio losses ratcheted up Mr Son’s deficit to about US$2.8 billion from his Vision Fund 2 interest, and US$252 million at the Latam fund, according to disclosures for the September quarter.
His remaining deficit at SB Northstar was 233.6 billion yen (S$2.3 billion). The amount Mr Son owes SoftBank from his interests in Vision Fund 2 and the Latam fund rose by about US$750 million in the last quarter, according to Bloomberg calculations, confirmed by SoftBank.
Mr Son’s interests in Vision Fund 2 and the Latam fund were structured so the billionaire did not pay cash up front for his 17.25 per cent stakes. Mr Son is obligated to pay 3 per cent on the “unpaid equity acquisition amount” until repayment, interest that has been wrapped into his liabilities.
There is no deadline for repayment and the value of Mr Son’s positions could improve in the future, and for SB Northstar, Mr Son has already deposited some cash and other assets.
Mr Son has deposited 8.9 million of his own shares as collateral for Vision Fund 2, and another 2.2 million shares as collateral for the Latam fund, the company said in its disclosures. The stock will only be released once the receivables are settled.
Mr Son’s net worth stood at US$12.7 billion after Thursday’s close, after adjusting for his deficit from his interests in Vision Fund 2 and the Latam fund, according to calculations by Bloomberg Billionaires Index. Bloomberg
