SoftBank Vision Fund lost ¥1 trillion in value during second quarter

Alibaba, SoftBank's largest asset, also saw its value drop by a third to $52 billion during the second quarter.
Written by Campbell Kwan, Contributor

"We are in a snowstorm again. It's a blizzard," SoftBank CEO and chairman Masayoshi Son said on Monday afternoon, when explaining how his company's Vision Fund lost around ¥1 trillion in value during the second quarter.

SoftBank's CEO pointed to China's crackdown on tech companies as the main reason for the dip, with its investments in China having been hamstrung by fines and bans over the past six months.

While not one of the company's Vision Fund investments, the company's largest asset Alibaba saw its valuation fall by around a third in the second quarter to $52 billion. Earlier this year, Alibaba was fined $2.7 billion for breaching China's antitrust regulations.

Meanwhile, the Vision-Fund backed Didi, acquired for $12 billion, is now only valued at $7.5 billion due to facing similar headwinds in China. In the past six months, the company has lost almost $3 billion in value, with most of that drop occurring after Didi was barred from app stores in the country in July after the Chinese government called for the company to undergo a cybersecurity review.

Outside of China, another Vision Fund investment -- Coupang -- saw its value decrease by $11 billion during the first two quarters of FY22.

"[The] SoftBank Vision Fund performance is not something I'm proud of," Son said during SoftBank's second-quarter results presentation.

Looking at SoftBank's Vision Fund earning performance for the six months to September, the segment had a pre-tax loss of ¥590 billion, which is a ¥1.5 trillion dip from what it recorded for the same period last year.

Despite the setback, Son said the company would continue to move ahead with investing more through Vision Fund 2.

In light of the company's poor performance, Son said the company would commence a ¥1 trillion share buyback that will last for the next 12 months after receiving pressure from shareholders to do so.

"SoftBank Group has decided to repurchase its own shares to enhance shareholder returns and to realise fair shareholder value by rectifying the situation where its shares are traded at a deep discount to net asset value," SoftBank said.

While Softbank's Vision Fund and Alibaba suffered setbacks during the six months to September, the company's Latin America Funds tripled in value when compared to last year to now be worth over ¥190 billion.

SoftBank's other core segments -- its Japanese telco and Arm -- continued to provide steady performances during the six months to September, with the segments seeing net sales grow by 12% and 60%, respectively.

For Japanese telco SoftBank, it saw net sales of ¥2.7 trillion yen, which culminated in pre-tax income of ¥532 billion. The pre-tax income figure was more or less the same as last year.

Arm, meanwhile, saw strong growth in sales due to a ramp up in shipments of Arm-based 5G smartphones, the deployment of networking equipment into 5G base stations, and more customers licensing Arm technology. This saw Arm receive a pre-tax profit of ¥34 billion yen, which is an almost ¥45 billion year-on-year improvement.

SoftBank's total comprehensive income for the six months to September 30 was ¥892 billion, which is a 43% dip from last year's performance. Softbank's first six months for FY21 contrasts starkly with its full-year performance last year, when it reported net profit of ¥4.99 trillion for the year ended March. At the time, Son had touted the Vision Fund's investments as "golden eggs".

Related Coverage

Editorial standards