Triple whammy: SoftBank shares slide 3.5 per cent after rocky 24 hours for Didi, Arm and Grab investments
Shares in Japanese conglomerate Softbank sank as much as 3.5 per cent today after three of its high-profile investments Didi, Arm and Grab were hit with setbacks in the last 24 hours.
The investment giant’s shares dropped as low as 5,423 yen ($47.89) today, before settling slightly higher, but with losses of 23 per cent over the last three weeks.
It comes after the group’s profit – particularly that of its tech-focused Vision Fund and Vision Fund II – has suffered in the past few months, as its gains from various IPOs were dragged down by falling valuations after Beijing’s regulatory crackdowns.
Last month, the group reported a second quarter loss after its Vision Fund unit took a $10bn hit from a decline in the share price of its portfolio companies.
After caving into investor pressure and announcing a $9bn share buyback – a go-to strategy for the group – alongside its results, Softbank founder Masayoshi Son was less optimistic than usual.
“What happened to us? We are in the middle of a blizzard,” Son said at an investor presentation following the company’s results.
“The SoftBank Vision Fund performance is not something I’m proud of.”
And the past 24 hours were further bad news for the group’s bets on tech …
First off, its portfolio company Grab, Southeast Asia’s biggest ride-hailing and delivery firm, made its debut on New York’s Nasdaq on Thursday via the world’s biggest Spac deal of $40bn.
But its reception was weaker than expected, and shares slid more than 20 per cent, pulling the merged company’s market cap down to $34.6bn.
Some had questioned whether the IPO would even take place this year, as Grab grappled with intensifying regulatory scrutiny for Spac deals, and delayed its debut while it worked through a financial audit of its accounts for the past three years.
Then a few hours later, the US Federal Trade Commission sued to block US chip company Nvidia Corp’s $80bn planned takeover of Softbank-owned British chip tech provider Arm.
It’s the latest blow for the deal, which has also faced regulatory challenges in Europe and the UK, where culture secretary Nadine Dorries ordered a national security probe into the transaction just two weeks ago.
Lastly, to top it all off, its Vision Fund darling Didi, the Chinese ride-hailing giant, announced it is delisting from the New York Stock Exchange to pursue a listing in Hong Kong, after intense pressure from Beijing to do so over data security qualms.
It will come as a huge blow for Softbank’s Vision Fund, which owns 21.5 per cent of Didi, and will likely send shockwaves through the rest of its China-founded portfolio, which it has gradually begun to shed in response to the recent regulatory crackdown on successful tech companies.