Image: Reuters Berita 24 English - When the company releases its April-June earnings results on Monday, sliding values in the listed portfol...
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| Image: Reuters |
Berita 24 English - When the company releases its April-June earnings results on Monday, sliding values in the listed portfolio of SoftBank Group Corp.'s Vision Fund business indicate that CEO Masayoshi Son will suffer additional losses as investors lose interest in the high-growth companies he favours.
According to Redex Research analyst Kirk Boodry, losses in the public portfolio of Vision Fund's robotics company AutoStore Holdings Ltd, e-commerce company Coupang Inc, and artificial intelligence company SenseTime Group Inc, whose shares fell by nearly half on the last day of June, could exceed $10 billion in the first quarter.
Although there is little information available regarding the private portfolio valuations of Vision Fund, writedowns helped to contribute to the record $26 billion loss the fund disclosed in May as investor apprehension over the prospects for high-growth businesses spreads to the private markets.
When Swedish payment company Klarna received cash last month at a valuation 85% lower than at a SoftBank-led funding round the year prior, it highlighted the magnitude of the reevaluation.
According to Jefferies analyst Atul Goyal, writedowns in the private portfolio are unlikely to accurately represent the market's current valuation weakness.
The second Vision Fund, in which Chief Executive Son has a personal investment, had been investing quickly, but in May, amid market uncertainty brought on by rising interest rates and political unrest, Chief Executive Son vowed to "play defence" and restrain expenditure.
The 64-year-old billionaire had accrued personal losses through the SB Northstar trading unit, which has since been shut down, wagering on publicly traded stocks and derivatives.
A spate of Son's lieutenants leaving the IT behemoth has made things more precarious. Rajeev Misra, a major figure in SoftBank's initiative to invest in late-stage entrepreneurs, has resigned as manager of Vision Fund 2 in order to form his own fund.
Although down from last month's highs, the cost of insurance against a default on SoftBank's debt and its bond yields remain high, and experts point to the conglomerate's limited financing choices given the portfolio deterioration.
Redex Research's Boodry stated, "Within Vision Fund itself, with the public holdings they have they don't really have a lot of options."
For financing, SoftBank has relied on its sizeable and liquid holding in e-commerce company Alibaba Group Holding Ltd. According to the Financial Times, the organisation has already raised as much as $22 billion through the shares.
Following the failure of a sale to Nvidia Corp., the conglomerate is aiming for an initial public offering (IPO) for chip creator Arm in the United States, although analysts doubt the listing's prospects.
SoftBank started a 1 trillion yen ($7.5 billion) repurchase in November to support shares that had fallen by roughly 50% from their March 2021 highs, but by late June, the fund had already been fully utilised.
($1 = 134.1600 yen)
