TOKYO – SoftBank Group’s core Vision Fund arm posted a US$7.2 billion (S$10 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 (S$10 billion) in the July to September period, following a 2.33 trillion yen loss in the June quarter. Overall, the Japanese conglomerate logged a net income of 3.03 trillion yen in the last quarter, buoyed by the disposal of a chunk of its Alibaba Group Holding stake. The company said its total profit on its disposal of Alibaba shares was 5.37 trillion 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 1.19 trillion yen on its public holdings in the quarter just ended. Of those, China’s SenseTime Group accounted for 364 billion yen, while United States food delivery firm Doordash accounted for 225 billion yen and Indonesian ride-hailing and e-commerce firm GoTo Group 108 billion yen, it said.
SoftBank also holds a stake in FTX.com, although it has declined to comment on 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 Mr 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 to raise cash and shore up its balance sheet. Much of its future investment strategy hinges on its ability to make good on its US$32 billion 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 chief financial officer Yoshimitsu Goto to focus on Arm’s operations, SoftBank said.
As attention turns to SoftBank’s balance sheet, the company 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 British online shopping group THG, British network provider Pelion, distressed-debt specialist Fortress Investment Group and Indonesian ride-hailing and e-commerce firm GoTo Group, according to Bloomberg Intelligence. BLOOMBERG
