SoftBank Group, the global technology investor that funds several Indian companies, said on Thursday it posted a record loss of more than $26 billion in its Vision Fund unit as the value of its portfolio declined. Masayoshi Son, founder and CEO of SoftBank, said this year the company may invest only half or a quarter of what it did last year.
Son’s comment points to a slowdown in major funding rounds globally and in India, caused by macroeconomic factors and the Russian-Ukrainian war. SoftBank reported an annual net loss of $13.12 billion.
“Nobody knows what will happen tomorrow in this kind of market. So we have to prepare for the worst. I want to put us in defense mode and accumulate a lot of money in hand. We would be much more careful when investing new funds,” Son said, during a company webcast. “We have a lot of revenue from most releases. The world is volatile. Inflation continues all over the world. Thus, the interest rate has to rise, which puts pressure on the market depression for the stock price,” Son said.
SoftBank said fears grew of a global economic slowdown as energy prices rose following economic sanctions on Russia over its invasion of Ukraine, combined with the start of a monetary tightening in the United States to curb inflation. There are also ongoing supply chain disruptions due to the Covid-19 pandemic. These macroeconomic headwinds led to increased volatility in global equity markets, which negatively impacted the value of the Company’s equity holdings and its net asset value (net asset value, calculated as the value of equity investments – adjusted net interest-bearing debt).
The company said it remains committed to ensuring the liquidity and diversity of its investment portfolio while adhering to its financial policy of maintaining a conservative LTV (loan-to-value) and cash position. Like many other international funds, SoftBank Vision Funds and Latin America Funds are not immune to changes in the external environment, so they continue to build and carefully manage their investment portfolios by closely monitoring the market and emphasizing the evaluation of the fundamentals of the beneficiaries.
In India, SoftBank has backed numerous companies and unicorns or startups with a valuation of over $1 billion. These include Paytm, Oyo, Ola, Lenskart, Policybazaar, FirstCry, Meesho, Unacademy, Zeta, Swiggy, Ola Electric and InMobi.
SoftBank’s $1.4 billion investment in Indian fintech Paytm currently has a fair value of around $800 million, resulting in a cumulative impairment loss of $600 million. However, his $100 million investment in another Indian company PB Fintech (parent company of PolicyBazaar) has a fair value of around $400 million, which translates into a cumulative valuation gain of $300 million.
SoftBank reported a total cumulative valuation loss of $9.7 billion for Chinese ride-sharing giant Didi and $2.6 billion for office-sharing company WeWork.
Food delivery company Swiggy closed a $1.25 billion fundraising round last year, marking the first investment in the category by SoftBank Vision Fund 2. It boosted the valuation of the London-based startup. Bengaluru more than 50% to $5.5 billion from $3.6 billion. earlier. In September last year, social e-commerce startup Meesho raised $570 million, led by Fidelity Management & Research Company and B Capital Group, a venture capital firm co-founded by Facebook co-founder Eduardo Luiz. Saverin and existing investors, including SoftBank. In September last year, edtech startup Unacademy went unicorn after raising $150 million in a round led by SoftBank, valuing it at $1.45 billion, a triple jump in just six months.
Last December, Son said that several years ago when Indian Prime Minister Narendra Modi came to Tokyo, he met him there and gave him the most important commitment to invest 5 billion dollars in India. Now, after 10 years, Son said SoftBank has already invested $14 billion in India. He said SoftBank was the biggest foreign investor in India. Last year alone, it invested $3 billion in India. “We provide about 10% of the funding for all unicorns in India,” Son had said.