SoftBank's Son humbled after Vision Fund's $8.9 billion loss

Darnell Taylor
November 8, 2019

SoftBank's operating loss was because of the "decrease in the fair values of investments including Uber and WeWork and its three affiliates" held by SoftBank's Vision Fund and Delta Fund, it said.

SoftBank, the Japanese technology conglomerate famous for seismic and visionary bets, has lost $4.7 billion in the WeWork debacle, the company said Wednesday. The massive loss compares with a 526 billion yen profit during the same period previous year. Also, continued losses at Uber - another key SoftBank investment - amounting to $1bn in the last quarter, has added further to SoftBank's financial woes.

WeWork's parent, the We Company, was forced to abandon an initial public offering of its shares on United States stock markets at the end of September after investors queried the huge valuation given to the office space rental company.

Son's net worth has plunged by about $6bn since July, when it peaked at about $20bn, according to the Bloomberg Billionaires Index, which tracks billionaires' wealth.

The job cuts come after SoftBank wrote down its investments in WeWork by $4.6bn and its founder, Masayoshi Son, admitted: "I made a bad investment decision and I am deeply remorseful".

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In a bit of good news for Softbank, it said it had won USA regulatory approval from the Federal Communications Commission for US carrier Sprint's merger with T Mobile. The shrinking valuation of Uber and WeWork, once among the brightest stars in the SoftBank constellation, also raises the prospect of more write-downs in the Vision Fund's portfolio with its high exposure to businesses that prioritize growth over profitability. He began by throwing up on a giant screen several newspaper headlines, saying media reports had pegged SoftBank or WeWork - or both - as bound to go bankrupt.

The Saudi Arabia-backed Vision Fund, which is run by ex-Deutsche Bank banker Rajeev Misra, had invested $70.7 billion in 88 companies at the end of September. Uber had pared back some of those losses since then, but fell to new lows on Tuesday after the company reported steep losses for the third quarter.

However, speaking with Bloomberg, Jefferies Group senior analyst Atul Goyal was critical of Son's role in the WeWork crisis. The deal includes $1.5 billion in warrants, up to $3 billion in stock purchases, and $5 billion in debt financing. After WeWork's failed IPO attempt, SoftBank was forced to bail out the start-up for more than $10bn in October. He said the situation at WeWork was under control, and he expects to turn it around. But Son said Internet technology is incorporated into WeWork's concept.

WeWork, which launched in 2010, has touted its model as revolutionising commercial real estate by offering shared, flexible workspace arrangements, with operations in 111 cities in 29 countries.

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