The Vision Fund incurs losses of $32 billion

  • SoftBank posted a record loss for its Vision Fund as a recent rally in technology stocks did little to help another difficult year for its main investment unit.
  • The Japanese giant Vision Fund sector posted a loss of 4.3 trillion yen ($32 billion) for the fiscal year ending March 31, compared to a loss of 2.55 trillion yen in the same period a year earlier.
  • About a year ago, Sun said SoftBank would enter “defense” mode amid headwinds and be more disciplined in its investments.

SoftBank faced headwinds in the investment division of the Vision Fund due to lower valuations of technology companies amid rising interest rates.

Kiyoshi Ota | bloomberg | Getty Images

SoftBank posted a record loss for its Vision Fund as a recent rally in technology stocks did little to help another difficult year for its main investment unit.

The Japanese giant Vision Fund sector posted a loss of 4.3 trillion yen ($32 billion) for the fiscal year ending March 31, compared to a loss of 2.55 trillion yen in the same period a year earlier.

SoftBank reported a total loss on its investment in Vision Funds of 5.28 trillion yen, compared to 3.43 trillion yen in the previous year. Although tech stocks have risen this year, they are still broadly lower than they were a year ago. The technology-focused Nasdaq 100 index fell about 11% during SoftBank’s fiscal year.

Overall, SoftBank posted a net loss of 970.14 billion yen for the fiscal year, narrower than the 1.7 trillion loss in the same period a year earlier.

Despite gains from exit investments in high-profile companies such as ride-hailing company Uber, SoftBank said it posted losses in areas including share prices of Chinese artificial intelligence company SenseTime and Indonesian ride-hailing and e-commerce company GoTo.

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Over the past year, SoftBank has been exiting some of its high-profile investments to raise cash. It trimmed its overall losses by selling shares in T-Mobile and Alibaba. It continues to offload some of its shares in the latter company through a derivative called the futures contract, after Son made his fortune through an early investment in Alibaba more than two decades ago.

In August, it said it sold its remaining stake in US ride-hailing giant Uber.

The companies SoftBank has invested in are well-capitalized, according to the Japanese financial giant Yoshimitsu Goto. He said that SoftBank has a number of companies ready to go public, which are valued collectively at $37 billion. He did not mention the names of these companies.

The brainchild of founder Masayoshi Son, SoftBank’s Vision Fund consists of Vision Fund 1 and Vision Fund 2 and invests in high-growth stocks, which have faced headwinds from rising interest rates globally causing investors to sell off riskier stocks such as technology.

Amid mounting losses, Rajeev Misra, a key Son ally and chief executive at SoftBank, stepped back from some of his positions in the company. Misra was instrumental in the early days of the Vision Fund, which was launched in 2017.

About a year ago, Sun said SoftBank would enter “defense” mode amid headwinds and become more disciplined in its investments.

The tactic appeared to be working in SoftBank’s fiscal fourth quarter from January to March, helped by a rally in tech stocks. SoftBank’s Vision Funds recorded investment losses of 236.8 billion yen in the same period, compared to 730.3 billion yen in the previous quarter.

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SoftBank said it made $3.14 billion in new or follow-up investments in the fiscal year, down from $44.26 billion in the same period a year earlier.

During a news conference Thursday, Goto said it had been an “unstable” year marked by geopolitical risks and financial system instability, citing the collapse of the Silicon Valley bank and issues at Credit Suisse.

“In the first quarter, we may be able to see some signs of improvement, but we don’t expect a substantial resolution … to those issues,” Goto said.

However, he said that AI technology is making “tremendous progress” with the company considering staying on the defensive.

“In situations like this, should we just maintain defense or should we maintain balance with offense?” Goto asked.

Investors are now eyeing the initial public offering of British semiconductor company Arm, which is owned by SoftBank, as a way to shore up the Japanese company’s balance sheet and possibly give it more money to make new investments. Last month, Arm secretly applied for a listing in US Arm earlier said it would list in the US over the UK, dealing a blow to the London Stock Exchange.

SoftBank agreed to acquire Arm in 2016. Goto said he was unable to discuss Arm at length due to the secret filing in the US, but said preparation for the IPO was “proceeding smoothly.”

Arm reported sales of 381.7 billion yen in the fiscal year, up more than 27% year-on-year. The company’s pre-tax income rose 18% year on year to 48.6 billion yen.

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