SoftBank’s Vision Fund posts $2b loss in third quarter

SoftBank posted an operating loss of 225.1 billion yen (US$2.1 billion) from its US$100 billion Vision Fund for the three months ended December 2019, down from the 176.4 billion yen (US$1.6 billion) of profit it recorded in the same period in 2018.

Photo credit: MIKI Yoshihito

The company attributed the drop to the decrease in the fair values of investments it held at the end of the third quarter, including Uber and WeWork. This pulled down the company’s overall operating profits to 2.6 billion yen (US$24 million), a 99.4% decrease from 438.3 billion yen (US$4 billion) it reported in the same quarter last year. The figure also counts the 332 billion yen (US$3 billion) dilution gain related to Alibaba’s secondary listing in Hong Kong.

The loss from the Vision Fund segment was offset by 227.7 billion yen (US$2.1 billion) of operating income the Japanese conglomerate raked in for the quarter, excluding results from its funds.

SoftBank also recorded net income of 124.3 billion yen (US$1.1 billion), coming from the 703.8 billion yen (US$6.4 billion) it posted in the same year-ago quarter.

The Vision Fund had invested US$74.6 billion in 88 companies in Q3, with fair value amounting to US$79.8 billion, excluding exited investments. Investees Vir Biotechnology and OneConnect also became publicly listed issuers during the quarter.

SoftBank Vision Fund began its operations in 2017, making large investments in potential high-growth companies, particularly in unicorns.

In July 2019, the company announced its plans to establish another mega fund – with an expected size of US$108 billion – to accelerate AI development. This came after the company roped in potential investors such as Apple, Foxconn, Microsoft, and the National Investment Corporation of the National Bank of Kazakhstan.

However, SoftBank completed the initial close for Vision Fund 2 at just US$2 billion, as investors were shaken up by WeWork’s failed attempt at going public.

The company is also facing bigger investment woes as Indian hospitality startup Oyo, one of its portfolio companies, recently laid off about 600 employees in China and roughly 1,200 staff in India as it restructures its operations.