SoftBank’s Vision Funds Are Looking Like A Soft Spot

SoftBank’s Vision Funds Are Looking Like A Soft Spot
Daniel Johnston

7 months ago2 mins

What’s going on here?

SoftBank was looking pretty vulnerable last quarter, reporting on Thursday that its Vision Funds were in the red once again.

What does this mean?

SoftBank’s investors had every reason to be hopeful. The firm’s Vision Fund business oversees the biggest tech-focused investment funds in the world – and with tech valuations on the rebound, they were probably counting on the rising tide to raise the firm’s leaky boat. No dice, though: some big investments did jump (like South Korean e-commerce company Coupang), but ill-starred private investments still clipped its wings. See, SoftBank marked down the value of its private holdings – the bulk of its investments – by about $3.9 billion, overshadowing its public holdings’ $1.9 billion gain. The resulting “accolade” was the corporate equivalent of a dunce’s cap: a record loss for the whole year, after a fifth straight quarter in the red for those once high-flying funds.

Vision Fund losses
Source: Bloomberg

Why should I care?

For markets: Still just window shopping.

SoftBank needs to be careful it’s got the cash to cover debts and other expenses. And while auctioning off parts of its Alibaba stake has helped so far, the firm seems to be itching to strike a bolder, less defensive stance now – and that’s going to require deeper pockets. Taking its chip-designing titan ARM public will help raise some funds – but right now it’s at the mercy of the flailing markets. The upshot: banks are touting a super-wide valuation range for ARM, anywhere between $30 and $70 billion.

SoftBank stakes

The bigger picture: Boarding the AI train.

SoftBank’s hoping to splash that cash on AI first and foremost. And that’s no wonder: the technology’s seeping into sectors left, right, and center, from aiding drug discoveries to improving educational offerings. But given the hype – and the fact SoftBank’s not exactly early to the party – it’ll have to work extra hard to sort the wheat from the chaff.



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