SoftBank expects over $16b Vision Fund loss

Japan’s SoftBank Group forecasts a US$12.1 billion operating loss for the year ended March 31, 2020 as it sees a decline in value of its tech investments and a “deteriorating market environment.”

Photo credit: MIKI Yoshihito / Flickr

The company said it expects a US$16.7 billion loss on its Vision Fund and a US$7.4 billion loss on other investments, including co-working startup WeWork and satellite telecommunications company OneWeb, which just filed for bankruptcy.

“This will be partially offset by the gain relating to the settlement of variable prepaid forward contract using Alibaba shares recorded in the first quarter of fiscal 2019 and the dilution gain from changes in equity interest in Alibaba recorded in the third quarter of fiscal 2019, as well as an expected year-on-year increase in income on equity method investments related to Alibaba,” SoftBank said in a statement.

Oyo, one of SoftBank’s biggest bets, has also caught some trouble amid the Covid-19 pandemic. Ritesh Agarwal, the founder and group CEO at Oyo, recently announced furloughs and pay cuts to ensure long-term cash runway. Agarwal said the company’s revenue and occupancies have dropped by over 50% to 60%.

See also: Masayoshi Son’s investment woes worsen with Oyo layoffs

Meanwhile, there are reports that SoftBank’s second Vision Fund would be frozen. Vision Fund 2, announced in July last year, is expected to raise at least US$108 million. However, the company has been looking to scale back its plans for the second mega fund due to a series of incidents involving WeWork and Uber.

“At the moment, I think that our next fund size should be a little bit smaller because we have caused concerns and anxiety to a lot of people,” SoftBank CEO Masayoshi Son said in the company’s Q3 earnings presentation in February.

Late last year, SoftBank completed the initial close for Vision Fund 2 at just US$2 billion. The company was reportedly struggling to raise funds for the new fund amid the woes related to WeWork.