SoftBank’s Signature Vision Funds suffered a quarterly investment loss of $5.5 billion as the technology conglomerate put less money into start-ups navigating the global tech rut and higher borrowing costs.
For the first time in decades, the group’s billionaire founder Masayoshi Son is not expected to make a presentation on Tuesday after announcing last year that he would focus on listing UK chip designer Arm.
In recent quarters, SoftBank has emphasized a shift to the conglomerate’s “defensive” position, with an emphasis on retaining cash. The message is designed to reassure investors concerned about the group’s borrowing costs with rising interest rates around the world.
“Significant uncertainty remains in labor markets, future monetary policy road maps, as well as corporate earnings,” Navneet Govil, executive managing partner at SoftBank Global Advisors, said in an interview. “So our posture remains defensive and focused on building resilience.”
As of the end of December, SoftBank said the fair value of the $100 billion Vision Fund I was 4.4 percent lower than a year earlier because of markdowns in privately held companies, such as Ryde, despite gains in some listed holdings. -Hailing group Didi and Sneak. The valuation of investments in Vision Fund II was down 6.2 per cent.
For the October to December quarter, SoftBank reported investment losses of ¥731.94bn ($5.5bn) for its two vision funds and a fund investing in start-ups in Latin America, compared to a ¥1.38tn loss in the previous quarter .
Through the three months, one of the world’s biggest tech investors generated a net loss of 783.41 yen, well below analysts’ forecast of a profit of 103.59 yen, according to S&P Global Market Intelligence.
Last quarter, the company reported a massive ¥3tn net profit, but this was mainly the result of the historic sale of its stake in Chinese e-commerce conglomerate Alibaba.
Kirk Boudry, an analyst at Redex Research, said it will probably take time for market sentiment to improve on SoftBank and its Vision Funds, which will make it difficult for them to expand investing in the near future.
“In order to be more proactive and aggressive with investments, they need money,” Boudry said. “Arm’s initial public offering is the fastest way for them to monetize, but beyond that, you can’t sell much within the Vision Fund because many of the investments are underwater.”