TOKYO (BLOOMBERG, REUTERS) – SoftBank Group logged a record annual loss at its Vision Fund unit as a global sell-off in technology shares pummelled the value of public holdings like Coupang, Didi Global and Grab Holdings.
The Vision Fund unit swung to a loss of 2.64 trillion yen (S$28.5 billion) for the year ended March 31, down from a record 4.03 trillion yen profit in the previous year. It was the biggest annual loss since founder Masayoshi Son repositioned his firm into an investment holding company with the Vision Fund’s launch in 2017.
The world’s largest tech fund has been grappling with pandemic-driven write-downs and a global stock market rout that sent once-hot technology darlings tumbling. The Vision Fund’s portfolio dragged the Japanese company’s annual net loss to 1.71 trillion yen, from a 5 trillion yen profit a year ago.
“All the investments in the portfolio continue to go down,” Mr Kirk Boodry, an analyst at Redex Research, said ahead of the earnings release. “There is a lot more concern and worry about where stocks can eventually end up.”
SoftBank shares are down 17 per cent year to date, including an 8 per cent drop on Thursday. The tech-heavy Nasdaq 100 Index has slumped 27 per cent and tumbled into a bear market in March over concerns of runaway inflation, rising interest rates and a possible slowdown in the United States’ economic growth.
SoftBank’s controversial SB Northstar unit also revealed that it lost 669.5 billion yen while investing in publicly traded stocks. The unit is a joint venture between SoftBank and Mr Son, who personally holds a 33 per cent stake.
The downturn in global equities is dealing a blow to SoftBank’s basket of stock picks, which is full of tech names that have traded in high multiples backed by easy money. Blockbuster listings by firms like South Korean e-commerce giant Coupang, China ride-hailing pioneer Didi and Chinese online property platform KE Holdings have gone from being the main driver of profit growth to biggest drags.
Coupang shares dropped 40 per cent in the first quarter, Didi fell 50 per cent and KE Holdings slid 39 per cent.
Even Alibaba Group Holding, the Chinese e-commerce giant that became one of the most successful venture deals of all time, has lost luster. Scandals and missteps from WeWork, Wirecard and Greensill Capital have led to international scrutiny.
“People thought Son could make good investment decisions,” said Mr Mio Kato, an analyst at LightStream Research who publishes on SmartKarma.
“Now, there is less evidence that SoftBank management’s investment decisions are good. Wirecard and WeWork are among the examples. When the environment changes, they are no longer effective.”