Vision Fund slide shows more pain for SoftBank’s son

Japan’s SoftBank Group Corp CEO Masayoshi Son attends a news conference in Tokyo, Japan November 5, 2018. REUTERS/Kim Kyung-Hoon/File Photo

TOKYO, Aug 5 (Reuters) – Sliding valuations at the listed portfolio of SoftBank Group Corp’s ( 9984.T ) Vision Fund unit point to more pain for Chief Executive Masayoshi Son when the group reports April-June earnings on Monday, as investors are cool. high growth companies it favors.

Vision Fund’s public portfolio loss in the first quarter could exceed $10 billion, Redex Research analyst Kirk Boodry estimated, following the fall of robotics firm AutoStore Holdings Ltd ( AUTO.OL ), e-commerce firm Coupang Inc and artificial intelligence company SenseTime Group Inc (0020). HK), whose shares nearly halved on the last day of June.

While there is limited visibility into the valuations of the Vision Fund’s private portfolio, write-offs contributed to the record $26 billion Vision Fund loss reported in May, as investor concern over the outlook for high-growth stocks spills over into private markets.

The extent of the revaluation was underlined when Swedish payments company Klarna last month raised capital at a valuation 85% lower than in a SoftBank-led funding round last year.

Write-offs in the private portfolio are unlikely to reflect current weakness in market valuations, Jefferies analyst Atul Goyal said.

CEO Son has been quick to invest through the second Vision Fund, in which he has a personal stake, but in May pledged to “play defensive” and rein in spending amid market turmoil caused by rising interest rates and political uncertainty.

The 64-year-old billionaire previously made personal losses betting on derivatives and publicly traded stocks through his trading arm SB Northstar, which has since closed.

Compounding the uncertainty at the technology conglomerate is the departure of a number of Son’s lieutenants. A key architect of SoftBank’s push to invest in startups, Rajeev Misra, stepped down from running Vision Fund 2 to start his own fund.

The cost of insuring SoftBank’s debt default and bond yields remain elevated, albeit from last month’s highs, and analysts point to the group’s limited financing options given the portfolio’s weakness. read more

“In the Vision Fund itself, in the public holdings that they have, they don’t really have a lot of options,” said Redex Research’s Boodry.

SoftBank relies on its large and liquid stake in e-commerce company Alibaba Group Holding Ltd ( 9988.HK ) for funding. The group has now raised up to $22 billion using the shares, the Financial Times estimates.

The conglomerate is targeting an initial public offering for chip designer Arm in the United States after a sale to Nvidia Corp ( NVDA.O ) collapsed, but analysts are questioning the prospects for the listing.

SoftBank launched a 1 trillion yen ($7.5 billion) buyback last November, supporting shares that have about halved from March 2021 highs but had used more than 60 percent of capital by the end of June.

($1 = 134.1600 yen)

Report by Sam Nussey. Editor: Christopher Cushing

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