SoftBank Vision Fund posted a loss of $32 billion in the fiscal year ended March which was 70% higher than the previous year and a new record for the Masayoshi Son-led company.
SoftBank’s Vision Fund is among the leading private equity investors globally and has invested in a portfolio of diverse companies spread across the world.
However, startup valuations have plummeted pretty much around the globe with some exceptions – especially in AI companies.
Meanwhile, the losses were almost equally distributed between Vision Fund 1 and Vision Fund 2.
SoftBank Vision Fund 1 reported an investment loss of $17.3 billion but the fair value of investments at the end of March rose 0.4% as compared to the previous quarter.
Vision Fund 2 reported an investment loss of $18.4 billion and the fair value of investments also fell by 5.4%.
Notably, the values of publicly traded securities in both the funds rose sequentially – thanks to the Q1 2023 rally in tech stocks which led to a 20% rise in Nasdaq Composite.
However, the investment value of privately held companies fell by 3.6% in Vision Fund 1 and 7.7% for Vision Fund 2.
SoftBank said, “For private portfolio companies, the fair value decreased in a wide range of investments, mainly reflecting markdowns of weaker-performing companies and share price declines among market comparable companies.”
SoftBank Posts Record Losses Amid Startup Valuation Bust
It was among the biggest beneficiaries of the tech boom as a lot of companies that it backed including Grab, Coupang, Didi, and DoorDash went public.
It was able to exit many of its investments at a profit during 2020-2021 as the global IPO market was red hot and investors were willing to pay a valuation premium for newly listed companies.
However, the US IPO market has been literally dead for over a year now. Given the slump in stock prices of companies that went public between 2020 and 2021, investors are now apprehensive about investing in IPOs.
Meanwhile, there are some signs of a nascent recovery in IPO markets and even Arm Holdings which is owned by SoftBank has confidentially filed for a US IPO.
- Read our guide on the best upcoming IPOs
Arm has meanwhile had a chequered past and SoftBank’s attempts to sell the company to Nvidia failed amid regulatory troubles.
The two companies mutually called off the deal last year and SoftBank said it would pursue a listing instead.
While UK leaders were expecting Arm to choose London for its listing, the company which is based in the UK only instead opted for a US listing.
SoftBank is in “Defence Mode”
Last year, Son said that SoftBank would now go into “defense” mode. The company is indeed playing defensive looking at its portfolio actions. It has exited its stake in Uber and has gradually sold off Alibaba shares.
The company might be looking to sell more Alibaba shares as is illustrated in its forward contracts.
Also, between Vision Fund 1 and 2, SoftBank invested only $0.4 billion in the March quarter – the third consecutive quarter when the quarterly investment was below $1 billion.
During the heydays of the tech boom, it was not unusual for SoftBank to invest over $1 billion in a single company only.
Things have however changed and SoftBank does not expect things to change much in the current quarter also.
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