Japan’s SoftBank Group on May 12 reported a net loss of 1.7 trillion yen ($ 13 billion) for the fiscal year ended March 31 2022, as the Japanese conglomerate’s listed portfolio companies were hit hard by falling tech valuations across the globe with investors pricing in interest rate hikes and China tightening regulations on the industry.
According to Reuters estimates, SoftBank’s Vision Fund investment unit posted a record loss of over 2.97 trillion yen for the Jan-Mar quarter hitting the Japanese investment conglomerate’s profits for the year. The Masayoshi Son-led investment firm had reported a net profit of 4.99 trillion yen ($ 38 billion) for the previous fiscal year, with the Vision Fund unit clocking a profit of about 4.03 trillion yen.
Shares of South Korea’s Coupang Inc and China’s Didi Global, two of SoftBank’s biggest portfolio companies, have plummeted in the Jan-Mar quarter, dragging the Japanese investment conglomerate into losses for the year. Coupang Inc’s shares are trading 70% below its listing price. SoftBank’s $ 8.2 billion investment in Coupang is currently valued at around $ 2.2 billion, according to the financials.
To be sure, Coupang Inc and Didi Global are not the only two. Globally, shares of high-growth technology companies have fallen with public shareholders raising concerns over their paths to profitability. In India, Paytm’s parent One97 Communications Ltd, and PolicyBazaar’s parent PB Fintech Ltd, which are among SoftBank’s largest portfolio companies in the country, are trading much lower than their listing prices, hitting the Japanese conglomerate’s financials.
SoftBank’s $ 1.4 billion investment in Paytm, currently has a fair value of around $ 800 million, while the Japanese conglomerate’s $ 400 million investment in PB Fintech has a fair value of around $ 100 million.
SoftBank’s net loss for the year comes a couple of days after the Financial Times reported that New York-based hedge fund Tiger Global was hit by losses of around $ 17 billion during the year due to sell off in global equity markets.
On May 11, Tiger Global made its first seed level investment in India, in what was a shift for the hedge fund in its strategy as it usually invests at later stages.
SoftBank has been an aggressive investor in India and has invested over $ 14 billion in technology startups in the country. Most of these investments have happened over the last five years. SoftBank has some of the country’s most-valued technology startups in its portfolio and in 2021 alone, SoftBank invested over $ 3 billion across 17 deals, Vikas Agnihotri, operating partner, SoftBank Investment Advisers had said recently at a media event.
SoftBank’s two more portfolio firms–hotel aggregator Oyo and logistics startup Delhivery–are set to get listed in India this year. Both the companies had delayed their listing amid volatility in global financial markets. Delhivery is now set to list on the exchanges later this month, but SoftBank has trimmed its offer for sale (OFS) component. Oyo’s IPO, meanwhile, is still awaiting SEBI’s approval and Moneycontrol had reported in March that SoftBank, along with a few other existing investors, are looking to do away with their OFS component altogether, looking at the hammering received by loss making companies like PB Fintech, and Paytm from public investors.
Interestingly, SoftBank has not invested in any major rounds in India this year yet, amid a slowdown in the country’s startup ecosystem, which saw two consecutive years of hypergrowth and aggressive fundraising.
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