Masayoshi Son now owes SoftBank $4.7 billion on side deals

SoftBank Group CEO Masayoshi Son

Masayoshi Son is now personally on the hook for about $4.7 billion on side deals he set up at SoftBank Group Corp. to boost his compensation, after mounting losses in the company’s tech portfolio wiped out the value of his interest in the second Vision Fund.

Over the years, the Japanese billionaire’s controversial personal stakes in SoftBank’s investments drew fire from investors, who pointed to the mix of personal and company interests as a corporate governance concern. Son -- who holds a more than 30% stake in SoftBank -- has denied there was a conflict of interest and said it was remuneration for his investment experience, in lieu of investment fees.

The move has backfired, enveloping Son’s personal finances in the downside of the world’s biggest tech investor’s bets. Son was down more than $4 billion on his side deals through the June quarter, Bloomberg News reported earlier.

Son last week said he was stepping away leading earnings calls, to focus on preparing chip designer Arm Ltd. for a public listing -- an event that would give SoftBank fuel to again pursue new investments. SoftBank will bide its time in a tech winter and pay down its debt, he said.

Masayoshi Son Is Now Down $4 Billion on His SoftBank Side Deals

The 65-year-old founding chief executive officer holds 17.25% of a vehicle set up under SoftBank’s Vision Fund 2 for its unlisted holdings, as well as 17.25% of a unit within its Latin America fund, which also invests in startups. He has a 33% stake in SB Northstar, a vehicle set up at the company to trade stocks and derivatives.

Son’s interests in Vision Fund 2 and the Latam fund were structured so the billionaire didn’t pay cash up front for his 17.25% stakes. Son is obligated to pay 3% on the “unpaid equity acquisition amount” until repayment, interest that has been wrapped into his liabilities.

Son’s net worth stood at $12.7 billion after Thursday’s close, after adjusting for his deficit from his interests in Vision Fund 2 and Latam fund, according to calculations by Bloomberg Billionaires Index.

SoftBank’s Vision Fund arm posted a $7.2 billion quarterly loss last week, driven by the declining value of portfolio companies such as SenseTime Group Inc., DoorDash Inc. and GoTo Group. The company has been selling off assets to raise cash and shore up its balance sheet, posting gains from selling a chunk of its stake in Alibaba Group Holding Ltd.