Japanese technology company SoftBank Group reported a $23.4 billion loss in Q2 2022 as the value of its investments declined due to widespread concerns about inflation and interest rates. The Masayoshi Son-led investment company stated on August 8, 2022, that the weakening yen was another factor that contributed to its record losses. These figures are in stark contrast to the net profit of around $5.7 billion (JPY761.5 billion) that the company reported during the corresponding quarter of 2021.
SoftBank’s Vision Fund 1 Loses Money on Paytm Investment
Paytm had received an initial investment of $1.6 billion from SoftBank’s Vision Fund 1, with a current investment value of $1.19 billion. Among the publicly traded companies in its India portfolio, Paytm contributed to a $407 million loss at the end of the June quarter of 2022. However, during the June quarter, Delhivery added a gross profit of $510 million to SVF1. SVF1 initially invested $397 million, with a return value of $907 million. SVF1 received $384 million in profit from PolicyBazaar. At the end of the June quarter, the fund invested $199 million in PolicyBazaar, with a return value of $583 million. Both Paytm and PolicyBazaar lost more than 50% of their value after going public, whereas Delhivery, which reduced the amount of its IPO, registered 20% increase since its debut. OYO, one of SoftBank’s portfolio firms, filed papers for an IPO but the shaky public markets forced the company to postpone its plans. Ola, Swiggy and other businesses also expressed a desire to go public shortly. SoftBank also raised as much as $22 billion in cash from deals that would sharply reduce its stake in Alibaba over the coming years, as the Japanese investor responds to a market downturn that ravaged its technology portfolio.
Sheds Holdings in Uber
As the SoftBank Group seeks to raise money in the face of mounting losses at its investment unit, it reported that it sold its final interest in the American ride-hailing behemoth, Uber. SoftBank claimed to have profited from the sale of its stake in Uber, which it purchased for $34.50 per share and sold between April and July 2022 for an average price of $41.47 per share.
Masayoshi Son Promises “Dramatic Cost-Cuttings”
After plummeting technology valuations, massive losses at SoftBank’s flagship Vision Funds will compel the group to start “dramatic” cost-cutting. After a $7 trillion investment gain at the two Vision Funds almost fully reversed over the past six months, Masayoshi Son announced on August 8, 2022, that SoftBank would subject itself to a “dramatic” group-wide cost-cutting effort. The Japanese company began negotiations to sell Fortress Investment Group, the asset management firm it acquired in 2017. Son stated, “We are ready to listen to possible buyers with an open mind.”
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