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What's behind Softbank's $32 billion loss in tech investments?



SoftBank announced a record loss in its results for the fiscal year ended in March. In this case, the downfall came from the two Vision Funds, which recorded a loss of 4.3 trillion yen (US$ 32 billion) in the period, against a loss of 2.55 trillion yen (US$ 19 billion) in the same period of the previous year.


  • In the overall picture of funds that Masayohi Son's manager owns, the overall loss was US$ 39 billion, a considerable increase over the US$ 25 billion loss in the previous fiscal year. On the other hand, the company's net loss fell to almost half.

  • In fiscal year 2022, it was US$ 7.2 billion against US$ 12.6 billion in the previous year.

  • While not disclosing exclusive data on the Latin America Fund, for the last quarter the fund disclosed that investment losses for Vision Fund 1 and 2, as well as its Latin American funds, totaled 250 billion yen (US$1. 8 billion).

WHAT IS BEHIND SOFTBANK'S LOSS DROP?


The drop in net loss has to do with Son's recent decision to put SoftBank into what he called "defense mode", halting further investment of its funds. The fund revealed it made $3.14 billion in new or subsequent investments in its fiscal year, down from $44.26 billion in the same period a year ago.

Also, last year it exited some of its higher profile investments to raise cash, trimming overall losses through the sale of shares in T-Mobile and Alibaba. In August, it said it sold its remaining stake in US giant Uber.

Last year, the fund was also more timid in investments in Latin America, a scenario quite different from when the company arrived in the region, with US$ 5 billion in its pocket, and created some of the main unicorns here, among them QuintoAndar and Credits.

According to data released by Pitchbook last year, total deals in the region saw a 71% drop in investment compared to the record $7.1 billion recorded in the third quarter of 2021.

WHAT ARE SOFTBANK'S NEXT PLANS?


As highlighted in a statement by the company's financial director, Yoshimitsu Goto, the companies in which SoftBank has invested are well capitalized. He also said the fund has several companies ready to go public, valued at $37 billion, but he didn't name the horse.


During a press conference this Thursday (11), Goto said it was an "unstable" year marked by geopolitical risks and instability of the financial system, citing the collapse of Silicon Valley Bank and problems at Credit Suisse. "In the first quarter, we can see some signs of improvement, but we do not expect a fundamental resolution", pondered the executive.


To improve the numbers for this year, SoftBank investors are eyeing the initial public offering of British semiconductor company Arm, in which the Japanese fund owns a majority stake. Last month, Arm filed a confidential US listing, a decision that didn't sit well with the London Stock Exchange. The manufacturer's momentum is good, as it posted sales of $2.8 billion in the fiscal year, an increase of more than 27% over the previous year. Source: StartSe


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