On Tuesday, SoftBank Group Corp. reported a net profit of 29 billion yen ($251 million) for the October to December quarter, as tech portfolio valuations weakened at its Vision Fund unit.
On Tuesday, SoftBank Group Corp. reported that it had cut the net profit of 29 billion yen ($251 million) for the October to December quarter, as tech portfolio valuations weakened at its Vision Fund unit. The result when SoftBank booked, compared to a profit of 1.17 trillion yen in the same period a year ago, was a record quarterly result at the time as its portfolio rallied.
After tech unicorns plunged into the “valley of the coronavirus” in the early days of the COVID-19 pandemic, SoftBank CEO Masayoshi Son saw a recovery in valuations as startups such as e-commerce firm Coupang hit the market. Now valuations are under pressure again as investors cast doubts on tech firms promising future profits and central banks move towards the pandemic stimulus.
The Vision Fund unit reported an investment profit of 111.45 billion yen during the quarter. Several portfolio companies are trading below their listing prices, with office-sharing firm WeWork, ridehailer Grab, and used-car platform Auto1 all falling during the quarter.
The group’s exposure to China has also affected performance, as regulators take action against tech firms. Shares of e-commerce giant Alibaba, in which SoftBank holds a stake, fell a fifth in the three months to the end of December. Such assets are used by the group for loans as it invests through its Vision Fund unit, which runs the $100 billion Vision Fund and a smaller second fund.
Vision Fund 2, which had $51 billion in committed capital at the end of December, has invested $43.1 billion in more than 200 startups. SoftBank said separately on Tuesday that its deal to sell chip designer Arm to Nvidia had fallen through amid regulatory hurdles.
The earnings come at a crucial moment for the group as senior executives exit the firm, including Chief Operating Officer Marcelo Clare, who led the restructuring of WeWork and launched the group’s Latin American-focused fund. Son, who said three months ago that SoftBank was in a “blizzard”, will speak at a news conference.