Softbank’s Vision Fund’s soured bets on tech prospects like Uber and Wework saw the fund lose $8.9bn and drag its parent company to its first quarterly loss in 14 years today.
Softbank’s high profile splurge on Wework saw the company fall to a $6.4bn quarterly loss in results revealed today.
The Japanese investment giant has just poured more than another $10bn in a rescue deal for the sprawling office space giant following an aborted initial public offering (IPO).
The value of Softbank’s investment in Wework dropped $3.4bn between July and September, the firm’s results showed.
The Vision Fund had spent $70.7bn on 88 companies by the end of September, with those investments now worth $77.6bn excluding exits, Softbank said.
Most of the fund’s publicly listed investments dropped in value over the quarter, including its bets on Slack, Uber, and Guardant Health.
Uber’s stock sank to fresh lows this week amid mounting losses.
However, a nine per cent boost in quarterly operating profit for Japanese telecoms arm Softbank Corp helped offset the Vision Fund’s troubles.
The huge extent of the losses comes as Vision Fund founder Masayoshi Son tries to raise a second $100bn tech investment fund.
Son has a reputation for spending on startups that burn through cash, relying on gut instincts to make big investments.
“This morning’s announcement of an $8.9bn Q2 loss in its Vision Fund is hardly conducive to generating a positive vibe when it comes to raising capital for its Vision Fund 2,” warned Michael Hewson, chief market analyst at CMC Markets.
Softbank declined to share a forecast for the current business year, citing too many uncertainties.
But Hewson added that this will raise “uncomfortable questions as to what other nasties could be on the way”.
“As things stand the investments in Uber, Slack and WeWork are already underwater, with the prospect that things could well get worse later today when the Uber share lock up expires with the shares already at a record low.”
Softbank is reportedly tightening governance at the firms it has invested in after Weworks near-total collapse.
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