SoftBank's Vision Fund loses record $32 billion in 2022-23 amid falling tech valuations

SoftBank Group logs $7.2 billion full-year loss on tech woes

SoftBank Group Corp's Vision Fund incurred a record loss of 4.3 trillion Yen ($32 billion) on investments amid falling valuations of technology companies across the globe, dragging the Japanese conglomerate into losses for the second straight fiscal.

SoftBank reported an annual loss of 970 billion Yen (about $7.2 billion) for the year ended March 31, 2023. In the previous fiscal year, the Vision Fund unit lost 2.6 trillion Yen on investments, dragging the company into a net loss of 1.7 trillion Yen ($12.6 billion).

For the fourth quarter, SoftBank's Vision Fund reported a much smaller loss of 297.5 billion Yen or about $2 billion, benefiting from the global rise of tech stocks as investors leaned towards the technology sector, considering its potential resilience against a probable macroeconomic downturn stemming from the banking crisis. Shares of tech companies thus gained in the Jan-Mar quarter.

Across the two vision fund investment units, the fair value of SoftBank’s listed portfolio companies at the end of the March quarter rose to $24.9 billion from $23.8 billion as of December 31, 2022.

The fair value of the Japanese conglomerate’s private portfolio companies, which account for a major part of its investments, however, remained under pressure at $60.5 billion as of March 31 against $63.5 billion a quarter ago. This suggests that SoftBank internally marked down the valuations of some of its private portfolio companies.

During the January-March quarter, the shares of three of SoftBank's largest listed portfolio companies, South Korean e-commerce company Coupang Inc, Norwegian robotics company Autostore Holdings, and Chinese ride-hailing company DiDi Global, rose by approximately 25 percent, 9 percent, and 20 percent, respectively.

The Japanese conglomerate’s $2.0 billion investment in Coupang was valued at $6.8 billion as of March 31, up from $6.2 billion as of December 31 2022. The fair value of SoftBank’s $2.8 billion worth investment in Autostore Holdings rose to $2.8 billion as of March from $2.4 billion as of December.

DiDi Global’s fair value, meanwhile, rose to $3.7 billion as of March from $3.1 billion as of the previous quarter, on SoftBank’s investment value of $12.1 billion.

SoftBank, a prolific startup investor in India, saw the fair value of its biggest listed Indian portfolio company Paytm rise to $0.6 billion at the end of March quarter from $0.5 billion as of December. During the January-March quarter, Paytm rose 20 percent. PB Fintech, while a small investment for SoftBank, also saw its shares jump over 40 percent in January-March.

Also Read: SoftBank offloads 2% stake worth $120 million in Paytm

SoftBank’s massive loss on its Vision Fund investment units for the previous fiscal year comes at a time when the Japanese conglomerate has gone extremely slow on investments. In the December quarter, SoftBank invested just $300 million across ‘a handful’ of deals, the company’s senior executives said at the earnings presentation, adding that the Japanese technology investor did not want to ‘rush and waste money.’

India, which has recently been one of SoftBank's favoured investment destinations, has also experienced a significant slump in activity. SoftBank has not made any investments in India since July of last year, and overall investments in the country decreased by 84 percent in 2022 compared to the previous year, Moneycontrol previously reported.

Similar to SoftBank, other aggressive startup investors in India have also significantly slowed down their investments in the past eight months. Sequoia Capital and Tiger Global Management, the two largest startup investors in the country besides SoftBank, have only invested in 11 deals so far this year, compared to almost 60 in the same period last year.

Due to the slowdown of some of the biggest and most aggressive investors, startups in India have had to implement several cost-cutting measures, including laying off thousands of employees and closing non-core verticals. The country's startup ecosystem, currently the world's third-largest, has also not witnessed the emergence of a new unicorn in the past eight months. India, which is also the world's third-largest unicorn ecosystem, currently has 108 unicorns.