Masayoshi Son’s late-afternoon worries: SoftBank owes nearly $5 billion, shares in Vision Fund 2 are almost worthless

Masayoshi Son, SoftBank’s founder and CEO, owes the company nearly $5 billion because of growing losses from technology investments, according to the Financial Times. This debt makes Mr. Son’s stake in the venture fund Vision Fund 2 almost worthless.

Billionaire Son’s growing personal debts were revealed through Financial Times analysis of SoftBank’s filings, as the investment firm is reeling from a wave of sell-off in transparent tech stocks. past 1 year. The valuations of the companies SoftBank invested in have plummeted.

Last week, Mr. Son, 65, said he would stop running SoftBank’s day-to-day operations. He said that his main focus will be Arm, a SoftBank subsidiary currently based in the UK and focused on memory chips. The statement comes after SoftBank reported a $10 billion investment loss in the third quarter of 2022.

The mounting losses caused Son’s debt at the company, mainly related to technology bets, to add billions of dollars. The reason is because SoftBank provides capital to Masayoshi Son to pour money into technology investment funds, while the repayment period of these loans lasts many years.

According to the Financial Times, the value of Son’s 17.25% stake in Vision Fund 2 – a fund with a size of $56 billion – was almost completely wiped out by the end of September. In the last quarter, the valuation of these shares was only 682 million USD.

This is in stark contrast to the end of 2021, when Son’s stake in Vision Fund 2 amounted to $2.8 billion. This is a boom time for many startups, which allows SoftBank to sell shares of some of the companies featured in its portfolio, such as WeWork and AutoStore.

SoftBank has not yet recovered the $2.8 billion owed by Son in relation to his stake in Vision Fund 2. The billionaire also owes SoftBank $669 million in a similar arrangement at a venture fund. specializes in supporting startups across the continent. Including the loss in the hedge fund of SB Northstar Group, the total amount owed by Son to the company is $4.7 billion.

The fact that Son owes Softbank billions of dollars comes as the company accelerates its share buybacks in recent weeks. The move pushed SoftBank’s stock price to a 12-month high this month, despite losses at the Vision Fund.

According to the Financial Times, Mr. Son personally bore a third of the loss at Northstar, the hedge fund that “stormed” the US technology stock market in 2020. The total loss from Northstar’s investment as of 2020. by the end of September this year reached nearly 6 billion USD.

It is known that Vision Fund 2 is one of the major investors of FTX. The recent windstorm for this cryptocurrency exchange cost SoftBank about $100 million.

Previously, Softbank reported a loss of $35 billion in the first half of the year. This is the first time in 17 years that the company has experienced two consecutive quarters of loss. According to experts, this trend will continue in the context of the difficult technology sector. Much of the recent loss has come from the Vision Fund, which lost $19.9 billion in the last quarter.

Still, Son is optimistic that the storm will pass. At that time, SoftBank will bounce back strongly with the development of the technology industry. Currently, SoftBank is significantly cutting back on investments in startups.

“ We want to accumulate a lot of cash ,” Mr. Son said during the earnings report in May. “ We will be more careful in the upcoming investments .”

Meanwhile, Son’s rival is constantly expanding. Insight Partners, best known for its software investments, announced in February it had successfully raised $20 billion for its 12th flagship fund. Andreessen Horowitz also raised $4.5 billion for a money-focused fund. number in May, which is double the size of the fund raised last year. They certainly outpace Son’s Vision Fund, considering the number of new investments.

For companies looking for capital, this is considered a golden opportunity to welcome new investors, in a challenging competitive environment.

“ There was a time when companies thought they would lose without SoftBank’s investment. Now, however, many people can sign checks of equal value. SoftBank’s old glory is gone ,” said Rebright’s Ebihara.

Son founded SoftBank in the early 1980s and built the company through a diverse array of investments. The billionaire poured money into a series of startups during the dot-com boom of the late 1990s, and said betting on Yahoo at the time made him the world’s richest man.

By: FT, Nikkei Asia