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SoftBank's second-quarter whiplashed by £6.9 billion loss in Vision Fund

SoftBank's second-quarter whiplashed by £6.9 billion loss in Vision Fund
FILE PHOTO: Japan's SoftBank Group Corp Chief Executive Masayoshi Son attends a news conference in Tokyo, Japan, November 5, 2018. REUTERS/Kim Kyung-Hoon/File Photo -
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Kim Kyung Hoon(Reuters)
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By Sam Nussey

TOKYO (Reuters) – SoftBank Group Corp <9984.T> reported its first quarterly loss in 14 years on Wednesday, with its giant Vision Fund suffering a 970 billion yen ($8.9 billion/£6.9 billion) loss on falling valuations of top tech bets such as WeWork and Uber.

The depth of the loss cast doubt on founder Masayoshi Son’s high-risk strategy of investing in cash-burning startups, as he is trying to raise a second massive investment fund.

The Japanese investment powerhouse posted an operating loss of 704 billion yen ($6.5 billion) in the July-September quarter compared to a 706 billion yen profit in the same period a year earlier and a 48 billion yen loss forecast by analysts, according to Refinitiv.

Last month SoftBank was forced to spend more than $10 billion to bail out office-sharing startup WeWork after its IPO attempt flopped.

The fair value of SoftBank’s investment in WeWork decreased by $3.4 billion in the second quarter.

The Saudi Arabia-backed Vision Fund, which is run by ex-Deutsche Bank banker Rajeev Misra, has invested $70.7 billion in 88 companies at the end of September. Those investments are now worth $77.6 billion excluding exits, it said.

With increased market scrutiny over the path to profitability for many of its bets on unproven startups, SoftBank is struggling to take them to market – an essential step to unlock capital to keep its investment juggernaut growing.

The value of most of the fund’s listed investments, including Uber <UBER.N>, Slack Technologies <WORK.N> and Guardant Health <GH.O> fell over the quarter.

At Uber that slide has continued as losses continue to mount and a post-IPO share lock-up ends, with its shares hitting new lows this week.

SoftBank’s investing activities are propped up by other pillars of Son’s empire including domestic telco SoftBank Corp <9434.T>, which on Tuesday reported a 9% rise in second-quarter operating profit, beating estimates, buoyed by its cash-cow mobile business.

SoftBank did not release a forecast for the current business year, saying there were too many uncertain factors.

(Reporting by Sam Nussey; Editing by Muralikumar Anantharaman)

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