Japanese investment giant SoftBank crashed to a $23.1bn loss in the second quarter of the year as its flagship Vision Funds were battered by the rout on global markets.
SoftBank’s Vision Fund investment arm, which was among the most prolific tech investment divisions in the world last year amid a global frenzy of venture capital deals, was hit by its second-largest quarterly loss ever as technology stocks continue to be hammered globally.
Billionaire chief Masayoshi Son admitted in a press conference today he had got carried away in some of the splashy bets the firm had made, saying he was “ashamed” for being so elated by “big profits in the past”.
“If we had been a little more selective and invested properly, it would not have hurt as much,” said Son.
SoftBank is now poised for a programme of “dramatic” cost-cutting in a bid to stem its losses, having already weathered a sharp fall to earth this year after it posted a record $26.2bn quarterly loss in the first quarter.
Son said the firm would be dramatically scaling back its investments in May, with Vision Fund approving just $600m in new investments in the first quarter, compared with $20.6bn in the same period the year before.
Son pledged to go further in his cost cutting measures today and committed to slashing headcount at Vision Fund alongside a rigorous group-wide cost cutting exercise, as well as restricting Vision Fund II to simply managing its current portfolio of investments.
The blizzard of venture capital investment seen last year has slowed in 2022, as rising interest rates and recessionary fears slow down deals and frothy valuations fall sharply.
Son admitted that SoftBank’s Vision Fund II had backed firms at elevated prices amid the boom and was now suffering the downturn.
“We were in a kind of bubble on valuations,” he said.
The second Vision Fund’s portfolio of 269 firms, which cost $48.2 billion to acquire, was worth just $37.2 billion at end-June.
In total, SoftBank has written down the value of unlisted assets across its two Vision Funds by $8.45n.
The loss comes after SoftBank rival Tiger Global saw its flagship fund fall 50 per cent in the first half of the year as its tech-heavy holding similarly plunged in value.