SoftBank’s Vision Funds post $5.5bn loss as Masayoshi Son steps back from spotlight

Masayoshi Son has disappeared from the spotlight for now, opting out of his legendary investor presentation for the first time in decades as SoftBank’s Vision Funds suffered a quarterly investment loss of $5.5bn.

With SoftBank’s bullish founder offstage, its finance chiefs repeated that its balance sheet and investment portfolio was “safe” and “resilient” to placate investors concerned by the group’s borrowing costs as interest rates rise.

“There remains significant unpredictability in the labour markets, future monetary policy road maps, as well as corporate earnings,” Navneet Govil, executive managing partner at SoftBank Global Advisers and finance chief of the signature Vision Funds, said on Tuesday in an interview. “So our posture remains defensive and is focused on building resilience.”

The technology conglomerate posted large investment losses for the fourth straight quarter with a decline in value for 73 per cent of its 472 investments. To address the headwinds, it cut back on deals with its two Vision Funds investing just $300mn in two companies, compared to $9.6bn during the same quarter in 2021.

For the October to December quarter, SoftBank reported an investment loss of ¥731.94bn ($5.5bn), compared with a ¥1.38tn loss in the previous quarter for its two Vision Funds and a fund investing in start-ups in Latin America.

Due to the continuing investment losses, Son owed SoftBank more than $5bn at the end of last year.

Govil said the outlook for the Chinese market has improved with the lifting of the zero-Covid strategy and the apparent easing of a clampdown on the technology sector. The exposure of Vision Funds to the chip export controls the US has imposed against China was also limited, he added.

But he remained cautious about the broader economic outlook, warning of continuing volatility to markets.

As of the end of December, SoftBank said the fair value of the $100bn Vision Fund I was down 4.4 per cent from a year earlier due to markdowns in privately held companies despite gains in some listed holdings, such as ride-hailing groups Didi and Grab. The valuation for investments in Vision Fund II was down 6.2 per cent.

During the three months, one of the world’s biggest tech investors generated a ¥783.41bn net loss, which was sharply lower than analysts’ forecasts of a ¥103.59bn profit, according to S&P Global Market Intelligence.

In the previous quarter, the company had logged a massive ¥3tn net profit, but that was mainly a result of its historic selldown of its stake in Chinese ecommerce group Alibaba.

Kirk Boodry, an analyst with Redex Research, said it would probably take time for market perceptions on SoftBank and its Vision Funds to improve, making it difficult for them to expand investments in the near future.

“In order to be more proactive and aggressive with investing, they need money,” Boodry said. “The initial public offering of Arm is the quickest way for them to monetise, but beyond that, there is not a lot you can sell within the Vision Fund because many of the investments are underwater.”

Son announced last year that he would step back from day-to-day operations at SoftBank to focus on listing the UK chip designer Arm.

“We don’t know when it will be, but we also hope that Mr Son will once again appear in front of everyone at an early timing as possible,” SoftBank’s chief financial officer Yoshimitsu Goto said at a news conference on Tuesday.

Goto said Arm was on track to list its shares in the 2023-2024 fiscal year. “Preparations are advancing at a significant pace and it’s matter of carefully assessing the environment [to go public],” he added. Company officials declined to comment on whether Arm would list in the US or the UK.