SoftBank’s Vision Fund, the brainchild of the company’s founder Masayoshi Son, has faced a number of difficulties including a slump in tech stocks due to rising interest rates, a tough China market and political geography.
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SoftBank announced one of its biggest losses at investment unit Vision Fund in its fiscal first quarter, as tech stocks continued to suffer amid rising interest rates.
The Japanese giant’s Vision Fund lost 2.93 trillion Japanese yen ($21.68 billion) in the June quarter. This is the second-biggest quarterly loss for the Vision Fund.
That contributed to SoftBank’s net loss of 3.16 trillion yen in the quarter compared with a profit of 761.5 billion yen in the same period last year. That was the company’s record quarterly loss.
SoftBank’s Vision Fund, which began investing in technology companies in 2017, has been hit by a slump in high-growth stocks as rampant inflation has sent the US Federal Reserve and other banks into disarray. other central banks have to raise interest rates.
Masayoshi Son, SoftBank’s outspoken founder and mastermind behind the Vision Fund, said in May the company will go into “defensive” and “cautious” mode at its investment pace after posting. one record loss of 3.5 trillion Japanese yen at the investment unit in the last financial year.
SoftBank said it has seen a decline in the share prices of a wide range of its portfolio companies, driven primarily by a global downward trend in share prices driven by growing concerns about economic downturn caused by inflation and rising interest rates. “
Shares of companies ranging from South Korean e-commerce company Coupang to DoorDash in the United States took a heavy hit in the second quarter of the year.
SoftBank said the share prices of private companies in its portfolio also fell.
“The market and the world are in turmoil,” Son said during Monday’s presentation. The CEO added that the company has been “more selective in its investments.”
SoftBank mainly relies on public listings of private companies to raise money to fund other startups. However, the stock market slump this year has made it difficult for companies to conduct initial public offerings, especially those in the technology sector.
The Japanese giant has turned to selling its shares in companies to raise money. On Monday, SoftBank announced that it was selling its stakes in several companies, including ride-hailing company Uber and online real estate company Opendoor. SoftBank raised $5.6 billion from these acquisitions.
SoftBank also said it raised $10.49 billion in the June quarter through the sale of Alibaba shares through a derivative called a forward contract. Son said SoftBank’s Alibaba stake is a rich source of cash for the company.
