SoftBank’s Vision Fund posts RM77b loss on WeWork, Uber

Uber’s disappointing public debut last May was followed by the implosion of WeWork in September

TOKYO • SoftBank Group Corp said its Vision Fund business lost ¥1.9 trillion (RM77.3 billion) last fiscal year after writing down the value of investments, including WeWork and Uber Technologies Inc.

The company posted an overall operating loss of ¥1.36 trillion in the 12 months ended March and a net loss of ¥961.6 billion, according to a statement yesterday. The Tokyo-based conglomerate released figures in two preliminary earnings statements last month. The losses are the worst ever in the company’s 39-year history.

SoftBank founder Masayoshi Son’s (picture) US$100 billion (RM437 billion) Vision Fund went from the group’s main contributor to profit a year ago to its biggest drag on earnings. Uber’s disappointing public debut last May was followed by the implosion of WeWork in September and its subsequent rescue by SoftBank. Now, Son is struggling with the impact of the coronavirus on the portfolio of startups weighted heavily toward the sharing economy.

“The situation is exceedingly difficult,” Son said at a briefing discussing the results yesterday.

“Our unicorns have fallen into this sudden coronavirus ravine. But some of them will use this crisis to grow wings.”

The drop in Uber’s share price was responsible for about US$5.2 billion of Vision Fund’s losses in the period, while WeWork contributed US$4.6 billion and another US$7.5 billion came from the rest of the portfolio, SoftBank said. The US$75 billion Vision Fund has spent to invest in 88 companies as of March 31 is now worth US$69.6 billion.

SoftBank also recorded losses from its own investments, including WeWork and satellite operator OneWeb, which filed for bankruptcy in March.

Last year, after WeWork’s effort to go public fell apart, SoftBank stepped in to organise a bailout and put its own COO Marcelo Claure in charge of turning around the business. But the pandemic has hammered its operations as workers shy away from gathering in shared office spaces.

WeWork’s valuation is now US$2.9 billion, down more than 90% from its peak. SoftBank has invested more than US$10 billion in the company.

Son’s investments in hotel-booking service Oyo Hotels & Homes and Uber, among the biggest in

his portfolio, have also fared poorly. Oyo, in which SoftBank invested about US$1.5 billion, last month furloughed employees in countries outside its home market of India as it struggles to survive the virus. Uber’s shares are trading about 28% below its IPO price.

As the concerns about investments mounted, Son responded with two share buybacks in rapid succession. The first ¥500 billion repurchase announced in mid-March initially failed to lift SoftBank’s stock. When the shares plunged more than 30% in the week that followed, Son unveiled a ¥2 trillion follow-up. — Bloomberg