Sam Nussey

TOKYO (Reuters – Japan’s SoftBank Group Corp reported a bruising loss at the Vision Fund investment unit, according to analysts. Investors sold high-growth stocks that the fund favored, prompting questions regarding their earning potential.

Masayoshi Son, the founder of technology investors is poised for full-year earnings. He will also discuss his risk appetite in light rising interest rates as well as war in Ukraine.

SoftBank’s China-tech assets have been in decline and shares in portfolio top firms Grab Holdings Ltd, DiDi Global Inc. and Coupang Inc. saw their stock prices drop between January and March.

Analysts predict that the conglomerate could also experience losses on unlisted assets, due to weakness in public markets. Private valuations are affected by this.

Kirk Boodry from Redex Research said that Vision Fund will suffer its worst-ever loss.

Boodry suggested that “they might do the exact same thing as two years back and only use kitchen sink stuff, because they know that there has been a strong quarter.”

Vision Fund’s unit suffered an $8.9 billion loss in second quarter investment, but then recovered to an $850m gain in third quarter thanks to private sector gains.

Vision Fund investment gains/losses https://graphics.reuters.com/HEALTH-CORONAVIRUS/xmvjoywjxpr/chart.png

Vision Fund is the unit’s flagship fund, which invests $100 billion in late-stage technology startups. It has made many successful public offerings and now trades below list prices.

While the Vision Fund 2 invested less, they faced higher prices for private assets and increased competition from Tiger Global. SoftBank’s financial freedom has been squeezed by falling portfolio valuations.

Insufficient visibility of portfolio performance and poor liquidity of listed assets make it difficult for SoftBank to initiate an upward revaluation of its shares. SoftBank shares trade at a discount to their group assets.

SoftBank has decided to prioritise investing via Vision Fund. It also closed its SB Northstar trading unit, which caused Son personal losses by placing bets on derivatives as well as listed stocks like Amazon.com Inc (NASDAQ) and Facebook. Now Meta Platforms Inc.

We believe that investment returns for other funds, such as the Latin American fund or SB Northstar were equally weak. Citigroup Mitsunobu Tsuruo (NYSE:), wrote in a note to a client

SoftBank held $35 billion worth of dry powder as December-end. SoftBank has also sold assets such as T-Mobile US (NASDAQ) Inc. SoftBank shares are now down 8%, supported by a 1-Trillion yen buyback program.

Son’s crowning jewel is his stake in Alibaba (NYSE: Group Holding Ltd.) The Chinese e-commerce giant lost approximately two-thirds in value between late 2020 and now, putting it at $60 billion.

SoftBank plans to list Chip Designer Arm in an Initial Public Offering (NASDAQ:) Corp) following the failure of a sale by Nvidia Corp. This initial public offering could potentially value the company as high as $60 billion according to Reuters.

($1 = 130.5500 yen)