‘Boat’ of Softbank, Apple, Saudi investment fund sink because Masayoshi Son: 80 billion USD invested in over 10 companies, spread over 7 business fields, making loss of 16 billion USD / year

Tram Ho

SoftBank Group of billionaire Masayoshi Son will report annual business results early next week. But this year will be very different.

The worst business year in history

Around this time last year, the company posted its highest operating profit in history thanks to Son’s big bets on tech startups like WeWork, Uber and Oyo. “Our time is finally here,” Son confidently told reporters and analysts in a brief earnings announcement in May 2019.

Yet this year, the company may have to announce the results of the worst business year in history due to the impact of Uber’s disaster IPO deal in May, a scandal that shocked the startup world. WeWork in September and a series of “emergency” measures from Softbank. At present, Son’s $ 80 billion portfolio is leaning heavily on the sharing economy, but this sector is most heavily affected by the Covid-19 epidemic.

It is worth mentioning that the contribution to Vision Fund has many big names including the Public Investment Fund of the Saudi government, Abu Dabi and Apple.

Thuyền của Softbank, Apple, quỹ đầu tư Ả rập Saudi chìm nghỉm vì Masayoshi Son: 80 tỷ USD đầu tư vào hơn 10 công ty, trải khắp 7 lĩnh vực kinh doanh tạo ra khoản lỗ 16 tỷ USD/năm - Ảnh 1.

Softbank expects to record a record operating loss of 1.35 trillion yen ($ 12.5 billion) in the fiscal year ending March 31. Vision Fund, which owns technology investments that contributed more than half of the group’s profits last year, turned into a loss of 1.8 trillion yen ($ 16.84 billion). The group’s total net loss is expected to reach 900 billion yen.

Emerging issues disoriented Son’s plan to raise a second giant tech fund. Last June, Son said he was close to achieving his goal of creating a $ 108 billion fund, of which Softbank contributed 38 billion USD. However, the WeWork scandal has led Saudi Arabia’s public investment fund and Abu Dabi’s investment company Mubadala to reconsider their investment capabilities. By February, Son confirmed Softbank would have to use its own capital.

Softbank also expects to record a 1 trillion yen loss from some of its major investments, including WeWork and OneWeb, which filed for bankruptcy in March. WeWork’s “shock” alone accounted for 700 billion yen in total. losses, including investments and loan commitments.

Thuyền của Softbank, Apple, quỹ đầu tư Ả rập Saudi chìm nghỉm vì Masayoshi Son: 80 tỷ USD đầu tư vào hơn 10 công ty, trải khắp 7 lĩnh vực kinh doanh tạo ra khoản lỗ 16 tỷ USD/năm - Ảnh 2.

Softbank suffered heavy losses with the failed Funds of Vision Fund.

Last year, after WeWork’s failed IPO effort, Softbank arranged a $ 9.5 billion loan and sent its CEO Marcelo Claure in the hope of reviving the business. Son said closing the businesses was unprofitable and suspending expansion would help generate profits. However, these commitments were completely destroyed by the Covid-19 epidemic.

WeWork has to reduce prices for some customers when the company allows employees to switch to work from home to avoid the spread of Covid-19. WeWork has not yet paid the April rent for a number of landlords and is working hard at negotiating with rental units to find a solution.

Earlier in the mid-February earnings announcement, Son announced in Tokyo that Softbank’s assets had stabilized thanks to a sharp increase in Uber stock following the WeWork scandal.

But, when Covid-19 arrived, Uber was forced to cut costs to reduce losses. The company also stopped hiring in March, pulled its financial forecast and recorded a $ 2 billion decrease in investments in April. These investments include stakes in Didi Chuxing and Grab – two companies also invested by Softbank. Earlier this month, Uber announced plans to cut 3,700 jobs, close 180 driving service centers and cease food delivery in seven countries. Uber stock is currently trading 27% below the IPO price.

Through the cold winter will be spring?

Son once said that he saw the combination of technology and mobility as a transportation revolution created when cars replaced horse-drawn carriages a century ago. However, the problem at Uber is a bad signal for SoftBank’s car portfolio. Total investment in this sector amounts to $ 18 billion, including Didi in China, Grab in Southeast Asia and Ola of India.

Thuyền của Softbank, Apple, quỹ đầu tư Ả rập Saudi chìm nghỉm vì Masayoshi Son: 80 tỷ USD đầu tư vào hơn 10 công ty, trải khắp 7 lĩnh vực kinh doanh tạo ra khoản lỗ 16 tỷ USD/năm - Ảnh 3.

Vision Fund’s portfolio.

Softbank has poured more than $ 10 billion into Didi, but after two years, the Chinese carmaker has lost confidence from investors. In January, shortly before the virus hit, Didi shares traded 40% below their peak.

Grab CEO Anthony Tan warned last month that the Covid-19 epidemic created significant challenges for the company and led them to make tough decisions about staffing and capital management. Grab is trying to make up for losses with food delivery. Softbank has invested US $ 3 billion in this company.

Oyo – a hotel reservation service is another example of how heavily Covid-19 has affected Son’s portfolio. Just a year ago, the billionaire announced that the founder of Oyo was one of the star entrepreneurs backed by Softbank. Son has poured $ 1.5 billion into the company and encouraged the young founder to make an effort to become the world’s largest hotel operator in hotel rooms.

The Indian company has expanded rapidly by securing the revenue for the hotels it has signed up for. But now, Oyo has temporarily suspended operations around the world and laid off thousands of employees. Tourism has been delayed, leaving hotel rooms everywhere empty.

Despite the fact that venture capitalists are determined to lose a lot, even all of their investments, the Vision Fund raises a big question mark due to its enormous size of up to $ 100 billion. surname.

Thuyền của Softbank, Apple, quỹ đầu tư Ả rập Saudi chìm nghỉm vì Masayoshi Son: 80 tỷ USD đầu tư vào hơn 10 công ty, trải khắp 7 lĩnh vực kinh doanh tạo ra khoản lỗ 16 tỷ USD/năm - Ảnh 4.
Thuyền của Softbank, Apple, quỹ đầu tư Ả rập Saudi chìm nghỉm vì Masayoshi Son: 80 tỷ USD đầu tư vào hơn 10 công ty, trải khắp 7 lĩnh vực kinh doanh tạo ra khoản lỗ 16 tỷ USD/năm - Ảnh 5.
Thuyền của Softbank, Apple, quỹ đầu tư Ả rập Saudi chìm nghỉm vì Masayoshi Son: 80 tỷ USD đầu tư vào hơn 10 công ty, trải khắp 7 lĩnh vực kinh doanh tạo ra khoản lỗ 16 tỷ USD/năm - Ảnh 6.

Son’s major investments in the sharing economy are all at a great loss.

Consecutive mistakes have made Son’s reputation – who turned $ 20 million into Alibaba into $ 130 billion worth of money after 20 years of hard hit.

To make matters worse, Son chose the wrong business direction for Vision Fund. About 40 billion USD of this fund comes from the sale of preferred shares with a commitment to pay 7% / year regardless of whether the investments are profitable or not. Last fiscal year, Vision Fund had to pay $ 860 million in interest.

Last February, Son said, “After a cold winter always comes spring. The situation is changing.” But that same day was the time when the World Health Organization’s official name for the horrific pandemic was sweeping the world: Covid-19!

According to Bloomberg Businessweek

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Source : Genk