SoftBank, the Japanese conglomerate, has recorded a record loss of 4.3 trillion Japanese yen ($32 billion) for its Vision Fund segment in the fiscal year ending March 31, 2023.
Despite a recent rally in tech stocks, the Vision Fund’s overall losses on investments increased to 5.28 trillion yen, up from 3.43 trillion yen a year before.
SoftBank reported a net loss of 970.14 billion yen for the fiscal year, which was a decrease compared to the 1.7 trillion yen loss it had in the same period a year earlier.
SoftBank has been trying to raise cash by selling some of its high-profile investments. However, despite these efforts, the losses in areas such as the share prices of Chinese artificial intelligence firm SenseTime and Indonesian ride-hailing and e-commerce company GoTo have contributed to its overall losses.
Despite the losses, SoftBank’s Chief Financial Officer, Yoshimitsu Goto, has stated that the companies it has invested in are well capitalized, and the company has a number of companies ready to go public, which are valued at a combined $37 billion.
SoftBank’s Vision Fund was launched in 2017 and invests in high-growth stocks, which have faced headwinds from rising interest rates globally. The company has been exiting some of its highest-profile investments to raise cash, including T-Mobile and Alibaba.
SoftBank has been disposing of some of its shares in Alibaba through a forward contract, following its founder Masayoshi Son’s early investment in the Chinese e-commerce giant more than twenty years ago, which made him his fortune. In August, it sold its remaining stake in U.S. ride-hailing giant Uber.
Despite the losses, SoftBank’s CFO has stated that the company has a number of companies ready to go public, which are valued at a combined $37 billion.
However, with the headwinds from rising interest rates, investors have been selling out of riskier equities such as tech, which may have further implications for SoftBank’s Vision Fund in the future.
SoftBank’s Vision Fund Faces Huge $32 Billion
Around a year ago, SoftBank’s founder, Masayoshi Son, announced that the company would go into “defense” mode due to the challenges they were facing and become more disciplined with their investments.
SoftBank’s fiscal fourth quarter from January to March appeared to reflect the success of this tactic, thanks to the rally in tech stocks.
In this timeframe, SoftBank’s Vision Funds experienced investment losses amounting to 236.8 billion yen, which is a decrease from the 730.3 billion yen reported in the previous quarter.
SoftBank disclosed that it invested $3.14 billion in new or additional ventures during the fiscal year, which is a decrease from $44.26 billion in the same period in the preceding year.
At a press conference, SoftBank’s CFO, Yoshimitsu Goto, acknowledged that the past year has been unstable, marked by geopolitical risks and financial system instability, citing the collapse of Silicon Valley Bank and issues at Credit Suisse.
Goto said that although the first quarter of the current fiscal year may show some signs of improvement, he does not expect a fundamental resolution to the aforementioned issues.
He nevertheless mentioned that SoftBank has been making progress in artificial intelligence technology and is contemplating whether to continue with its defense mode approach or balance it with offense.
Investors are now looking forward to the initial public offering (IPO) of Arm, a British semiconductor firm owned by SoftBank, which may help improve SoftBank’s financial situation and provide more funds for new investments.
Arm recently filed confidentially for a listing in the U.S., dealing a blow to the London Stock Exchange, which the company previously said it would list on.
Although SoftBank agreed to acquire Arm in 2016, the company is now preparing for an IPO, which is said to be progressing smoothly.
The fiscal year ending March 2022 saw Arm’s sales rise by over 27% year-on-year to 381.7 billion yen, while pre-tax income increased by 18% year-on-year to 48.6 billion yen.
Despite this, SoftBank’s CFO Goto could not discuss Arm at length due to the confidential filing in the U.S.