SoftBank reports consolidated loss of $23.4B

The Vision Fund unit of SoftBank reported a loss of $21.68 billion for the first quarter of FY23 due to steep decline in the share value of its portfolio companies.

SoftBank has reported a consolidated loss of 3.16 trillion yen ($23.37 billion) for the first quarter ended June 30 for FY23 as compared to a profit of 761.5 billion yen in the same period a year ago.

SoftBank attributed this record loss to the lowered value of its investments in companies due to the growing concerns over economic recession driven by inflation and rising interest rates.

The two main investment vehicles of this Japanese company are SoftBank Vision Fund I and II, which is close to $150 billion in size. This unit posted a loss of 2.93 trillion yen ($21.68 billion) for the first quarter.

SoftBank has been under continuous pressure ever since the central banks across the world started to increase interest rates to curb rising interest rates. This resulted in stock markets entering into a downward mode.

During its earnings presentation, SoftBank Chairman Masayoshi Son said, "We have been defensive rather than offensive...more selective." This is with reference to the spate of investments the SoftBank Vision Funds have done over the years.

A large number of investments of SoftBank are now publicly listed companies like Uber, DoorDash, and Alibaba, whose share prices have been under considerable pressure. Added to this, it has not been able to complete the sale of ARM, the semiconductor company under its portfolio to Nvidia due to regulatory concerns.

Son also noted that the group has to control themselves in what he termed as "heightened investment discipline". He also hinted at cost optimisation measures at the company.

Added to this, SoftBank continues to see significant management churn with some of the key lieutenants of SoftBank founder like Rajeev Misra and Munish Verma leaving the organisation.

SoftBank has been one of the leading investors in the Indian startup ecosystem with unicorns such as Swiggy, Meesho, Oyo, Emeritus, and Unacademy among others under its portfolio. At the same time, other companies such as Paytm, PolicyBazaar, and Delhivery are now publicly listed, but none of them have seen any significant rise in their share value. In fact, the share price of Paytm has witnessed a steep decline ever since its public listing in November last year.

SoftBank has also been very cautious this year with its investments in India.

(The story is updated with quotes from Softbank's earnings presentation.)

Edited by Megha Reddy


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