Japanese investment giant SoftBank’s Vision Fund posted a JPY4.3tn ($32bn) loss for the fiscal year ending 31 March 2020, compared with JPY2.55tn a year before. The overall loss from the fund was JPY5.28tn, up from JPY3.43tn the previous year. Despite a recent rally in tech stocks, the NASDAQ 100 index declined around 11% during the period. SoftBank Corp. posted a net loss of JPY970.14bn for the fiscal year, slightly narrower than its JPY1.7tn loss in the same period the previous year. SoftBank said it lost money in shares of Chinese AI firm SenseTime and Indonesian ride-hailing and e-commerce firm GoTo.
In order to raise cash, SoftBank has been exiting some of its better-known investments and narrowing losses through sales of shares in T-Mobile and Alibaba. It has continued to offload some Alibaba shares via a forward contract. In August, SoftBank said it had sold its remaining stake in US ride-hailing giant Uber. SoftBank’s founder, Masayoshi Son, had said a year ago that the company would go into “defence mode” and become more disciplined amid headwinds. The Vision Fund invests in high-growth technology firms such as ride-hailing apps and e-commerce. A report in 2019 found that a dozen of its 82 investments had fallen in value. The fund comprises of Vision Fund 1 and Vision Fund 2.
SoftBank said it made $3.14bn in new or follow-on investments during the fiscal year, down from $44.26bn in the same period a year prior. SoftBank had been criticised for making disastrous investments in firms such as WeWork, and billionaire founder Masayoshi Son had hoped to raise a second Vision Fund for future investments. However, a number of factors including SoftBank’s lacklustre performance led a number of large investors including Abu Dhabi’s Mubadala and the public pension fund of Saudi Arabia to not contribute, and Son decided to manage with only one Vision Fund. In November 2019, Son attempted to sell the company to Marubeni and the public-private Innovation Network Corp. of Japan. However, Marubeni was forced to walk away from negotiations.
Softbank’s chief financial officer, Kazuhiko Fujihara, said the results of the Vision Fund over the last fiscal year are “very, very severe” and the company plans to focus on improving profitability at its major holdings. The Vision Fund’s major holdings include Uber and Chinese ride-hailing firm Didi Chuxing. In addition, SoftBank is looking to spin off chipmaker Arm Ltd, which it acquired for $32bn in 2016. Arm is set to go public with the listing of its US division in 2022. The chip design firm has been selling technology to major Silicon Valley players since the 1990s and was crucial to the success of smartphones.
In particular, Apple has used Arm-architecture chips to power its iPhones, while Amazon and Microsoft have licences to use Arm designs in their data centre processors. However, Arm has faced increasing competition from existing partners after it unveiled designs for processors that would compete in some ways with the products of customers like Intel. SoftBank has been dragged lower by the poor performance of another part of its business, its wireless unit, due to stiff competition. In 2019, shares in SoftBank were down nearly 40%, making it one of the worst-performing conglomerates in Japan.
