Japanese investment giant SoftBank shed a major chunk of its stake in Alibaba to show investors its finances were “rock solid” in the wake of a $23bn loss in the second quarter, its finance chief has said.
SoftBank has been rocked by heavy losses this year amid a global rout on tech stocks, sending the prolific investor to consecutive record quarterly losses. Days after reporting its second quarter earnings, SoftBank moved to sell the majority of its stake in Chinese tech giant Alibaba, sparking some speculation that the investor was on shaky financial ground.
But Yoshimitsu Goto, chief financial officer at SoftBank, insisted the group had moved to sell to the stake to reassure investors.
“In times like this, it is critical as an investment group to instantly show that our financial strength is rock solid,” Goto said in an interview with the Financial TImes.
The move to sell the Alibaba has booked the firm a gain of $33.6bn but came at a time when shares in Alibaba were trading down around 71 per cent from their peak.
Goto added that the sale was designed to mirror a similar move in 2020 as the firm was rocked by the onset of the pandemic, when it offloaded stakes in a range of holdings including US carrier T-Mobile.
“Just like two years and a half ago, we wanted to show the world that we can do something like this because we are financially resilient. That was our objective,” he said.
SoftBank has been forced onto a defensive footing by the losses, leading chief Masayoshi Son to unveil a series of cost-cutting measures including slashing headcount across its Vision fund unit.
Son told investors that he was “ashamed” of his focus on profits and some of the splashy bets the firm has made in the past.
“If we had been a little more selective and invested properly, it would not have hurt as much,” said Son.
SoftBank’s share price plunged nearly seven per cent after it reported the losses but received a near-ten per cent boost after the move to sell its Alibaba holding.