SoftBank swings to record loss; shares down most since April 25

The Masayoshi Son-led investment firm had reported a net profit of 761.5 billion yen ($5.65 billion) for the previous fiscal year, with the Vision Fund unit clocking a profit of about 236 billion yen.

Shares of Norway’s robotics firm AutoStore Holdings, South Korea’s e-commerce firm Coupang Inc and Hong Kong’s artificial intelligence firm SenseTime Group Inc, three of SoftBank’s biggest portfolio companies, have slumped in the April-June quarter, dragging the Japanese investment conglomerate into losses for the quarter.

SenseTime Group Inc’s shares plunged by 47 percent on the last day of June, while those of Coupang Inc fell over 30 percent in the Apr-Jun quarter on the New York Stock Exchange. Shares of AutoStore Holdings fell 55 percent during the quarter on Oslo Stock Exchange.

Apart from AutoStore, Coupang and SenseTime, the fair value of the Japanese investment conglomerate’s 37 listed portfolio companies, across its two investment units--SoftBank Vision Fund 1 and SoftBank Vision Fund 2--was down $29.2 billion, as of June 30 2021, from its investment value of $40.7 billion. The fair value of SoftBank’s 312 unlisted portfolio companies, across the two investment units, meanwhile, was down $74.1 billion at the end of June quarter.

Overall, the fair value of the company’s 349 porftolio companies, had fallen to $103.5 billion as of June 30 2021, against its investment value of $116.3 billion. SoftBank net loss for the quarter comes a week after the Financial Times reported Tiger Global’s flagship fund, another aggressive technology investment unit, ended the first half of the year down 50 percent after fees amid a sell-off in global equity markets.

SoftBank has been an aggressive investor in India and has invested over $14 billion in technology startups in the country. Most of these investments have happened over the last five years. Since July last year, three of SoftBank’s biggest Indian portfolio companies - PolicyBazaar, Paytm and Delhivery - have gotten listed on India’s stock exchanges.

While shares of Paytm and PolicyBazaar have fallen over 50 percent since their listing in November last year, those of Delhivery have risen close to 20 percent, since it got listed in May this year. 

According to SoftBank’s financials, the fair value of SoftBank’s $1.4 billion investment in Paytm was $1 billion as of June 30. The fair value of the Japanese investment conglomerate’s $0.1 billion investment in PolicyBazaar was $0.3 billion, while that of its $0.4 billion investment in Delhivery was $0.9 billion at the end of the June quarter.

Earlier this month, the company had also organised a meeting between some of its top private Indian unicorns and India's biggest mutual fund managers in Bengaluru, aimed at discussing business progress and understanding public market investors better, as these unicorns prepare for an eventual public listing.

In May, SoftBank reported a record loss of 1.7 trillion yen for the fiscal year ended March 31 2022 and had said that it will cut its investments to a fourth in 2022 amid a slowdown in global financial markets. Interestingly, since the start of 2022, the Japanese investment conglomerate has not led any large funding round in India. 

Moreover, the Japanese investment conglomerate has seen two key senior-level exits in the recent past, adding to its chief executive Masayoshi Son’s woes. Rajeev Misra, one of SoftBank's top managerial personnel, had stepped aside from his primary roles at the Japanese investment conglomerate to build and run a new fund, Moneycontrol had reported.

Misra’s move of stepping away from main roles at SoftBank came six months after the company’s chief operating officer Marcelo Claure resigned due to disputes over compensation.