CEO Masayoshi Son’s attempt to bestride the tech investing industry has suffered a series of high-profile reversals after outsized bets through SoftBank’s first Vision Fund turned sour and investments made at bubbly valuations via a smaller second fund slumped.
With key architects of that strategy having left, Son has focused on shoring up the balance sheet, cutting his stake in e-commerce giant Alibaba Group Holding Ltd and stepping back from trademark presentations to focus on the listing of chip designer Arm.
Over the January-March quarter the fair value of the Vision Fund unit’s portfolio was marked down by $2.3 billion to $138 billion.
Assets gaining value include e-commerce retailer Coupang Inc and robotics company AutoStore Holdings Ltd, with office-share company WeWork Inc among the fallers.
SoftBank wrote down the value of private portfolio companies in both the first and second funds. At the end of March, the second fund’s portfolio was worth $31 billion compared with an acquisition cost of $49.9 billion.
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SoftBank has said it is in defence mode, putting investing activity on the backburner with the Vision Fund unit striking just 25 new deals over the past year.Looking to bolster its capital buffers, SoftBank raised $35.46 billion through prepaid forward contracts using Alibaba shares during the fiscal year. A further $4.1 billion was raised through forward contracts for the period after April 1, 2023.
With the uptick in some tech stock prices, investor attention has turned to how long SoftBank will maintain its holding pattern.
The Vision Fund emphasises that it holds stakes in companies including Arm and short video app TikTok parent Bytedance worth some $37 billion ready to go public in the future.
Investors are also focused on the potential for further buybacks. SoftBank’s shares closed down 0.85% ahead of earnings and have fallen almost 9% this year.
($1 = 135.0500 yen)