- Loses caused by market volatility, rising interest rates and Geopolitical instability
- SVF1 registered a net realised loss of ¥ 30.5 billion whereas Unrealized loss on valuation (net) totalled ¥ 1,215.6 billion
- Unrealized loss of VSF2 totalled ¥1,326.0 billion
- Previously, Softbank reported a net loss of $16.2 billion for the January-March quarter
SoftBank reported a record $23 billion loss at its Vision Fund unit due to market volatility caused by rising interest rates and political unrest.
It reported a consolidated loss of 3.16 trillion yen ($23.37 billion) for the first quarter ended June 30 of FY23, compared to a profit of 761.5 billion yen in the same period the previous year. SoftBank attributed this record loss to a decrease in the value of its investments in companies as a result of growing concerns about an economic downturn caused by inflation and rising interest rates.
SoftBank’s two main investment vehicles are the SoftBank Vision Fund I and II, both of which are close to $150 billion in size.
SVF1 registered a net realised loss of ¥ 30.5 billion, owing primarily to the monetization of investments in public portfolio companies. Shares in public portfolio companies are traded on stock exchanges or in over-the-counter markets.
Unrealized loss on valuation (net) totalled ¥ 1,215.6 billion, primarily due to a decline in the share prices of public portfolio companies, which reflected a global downward trend in share prices as a result of growing concerns about an economic recession caused by inflation and rising interest rates, as well as a decline in the fair value of private portfolio companies.
In Vision Fund 2, gain of 3.3 billion was realised. Unrealized loss on valuation (net) of VSF2 totalled ¥1,326.0 billion, primarily due to declines in the share prices of public portfolio companies as well as declines in fair value in a diverse range of private portfolio companies, reflecting mark-downs of those with recent funding rounds and/or poor performance.
A finance cost of ¥114.1 billion was recorded. Foreign exchange loss of ¥820.0 billion was recorded as a result of an increase in yen-denominated net liabilities of domestic Group companies due to the weaker yen. Due to an increase in the Alibaba share price, a derivative loss (excluding gain (loss) on investments) of ¥259.3 billion was also recorded related to prepaid forward contracts using Alibaba shares.
SVF1 made $0.06 billion in follow-on investments in existing portfolio companies in the first quarter and had 80 investments at the end of the first quarter. In the first quarter, SVF2 made new and follow-on investments totaling $2.11 billion, bringing the fund’s total cost to $49.65 billion. SVF2 had 269 investments at the end of the first quarter. LatAm Funds invested a total of $0.15 billion in the first quarter and had 88 investments as of the end of the quarter.
Previously, Softbank reported a net loss of $16.2 billion for the January-March quarter of this year.
Previously, SoftBank executive Rajeev Misra, who joined the company in 2014, left to launch his own venture. Michel Combes, a French businessman who served SoftBank Group as International CEO also resigned in June.
As on June 2022, Company has lost $9 billion of investment value in DiDi, $3 billion in We work. It has gained approx. $7 billion in Doordash and $6 billion in Coupang. Company has lost $407 million of value in Paytm.