SoftBank Group Corp CEO Masayoshi Son revealed on Monday that the company plans to lay off workers at its Vision Fund investing unit after a dip in the value of its portfolio resulted in a record-breaking quarterly financial loss.
Vision Fund, which redefined venture capitalism with big bets on startups including ride-hailing companies Uber and Didi, suffered a $23.1 billion loss in the quarter ending in April-June as value from its investment evaporated due to the stock market crash.
The outcome brings to a close a turbulent six months for the Vision Fund, which in May announced a record quarterly loss of $26.2 billion after SoftBank was entangled in increasing interest rates and political unrest that rocked markets around the world.
Son has already drastically cut back on his investing. Only $600 million in new investments were approved by the Vision Fund arm in the first quarter, compared to $20.6 billion during the same period last year.
On Monday, the billionaire pledged to take things a step further by constraining the second fund to only managing its existing investment portfolio and proposing staff cutbacks at the Vision Fund as well as cost savings for the entire organisation.
After the first Vision Fund’s massive bets on premature enterprises like office-sharing company WeWork failed, Son had already witnessed a number of significant setbacks, which pushed him to tighten capital controls with the second fund.
The billionaire asserted that Vision Fund 2, on the other hand, invested at low rates and acquired smaller holdings in a wider number of businesses.
After the results, the CEO is taking responsibility for investing in start-ups at the peak of the market and promising to cut spending to get back on track. Son promised to examine “everything” for possible cuts without sacrificing any “holy cows.” SoftBank’s senior and junior personnel in the front and back offices will be scrutinised by SoftBank to a degree never previously seen.
Compared to Friday’s closing price of $32.01, SoftBank sold Uber shares at an average price of $41.47 per share.
More than two-thirds of the capital has already been deployed in a 1 trillion yen buyback programme that the group started in November to support its shares, which have dropped by almost half from their highs in March of last year.
SoftBank said on Monday that it would be repurchasing further shares up to the value of 400 billion yen through August of the following year. Before the earnings were announced, shares finished up 0.7%, in line with the benchmark Nikkei 225 market.
