The power couple at the helm of SoftBank’s Vision Fund – founder and chief executive Masayoshi Son and fund manager Rajeev Misra — has been tested this year with high-profile flubs like WeWork, Uber and other lesser-known bombs bringing unwanted attention and losses.
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But according to people inside SoftBank, two of the technology world's most important players don't expect a divorce, at least not anytime soon.
Contrary to rampant speculation among Wall Street analysts and tech players, Misra has indicated to people internally he has no plans to leave the Vision Fund and still has the confidence of Son, FOX Business has learned.
Misra, who was wooed from Wall Street to SoftBank in 2014 and helped Son create the Vision Fund three years later, is telling people that despite a recent rough patch, he is well on his way to fixing the Vision Fund's problems by tightening up its investment criteria. He has even recently told people that he has made some progress in attracting new investors for the second Vision Fund that was announced earlier in the year, according to people with knowledge of the matter.
Misra has indicated two of the first Vision Fund's biggest investors — Saudi Arabia and Abu Dhabi — are now likely to make significant commitments to the second fund, these people say. As FOX Business was first to report, both sovereign wealth funds have been balking over an investment in the second fund following the WeWork and Uber debacles. Press officials for both did not comment.
Whether Misra's sanguine view of his job security is wishful thinking or reflects reality is a matter of debate; some Wall Street analysts and tech insiders are predicting his exit amid some of the most turbulent times the fund and SoftBank have faced in recent years. Investment bankers with contacts in the Middle East say the Saudi and Abu Dhabi funds have real concerns about a second Vision fund investment after the WeWork imbroglio.
One thing is certain: Much of Misra's future is dependent on maintaining the confidence of SoftBank's Son, who created the $100 billion Vision Fund two years ago, appointed Misra to run it, and quickly transformed it into a tech investing powerhouse.
A SoftBank spokesman declined to comment on the matter but would not dispute that Misra has no intention of leaving the fund.
Misra, for his part, has been known to describe his relationship with Son in familial terms even if it was forged through the cut-throat world of Wall Street tech investing, when Misra was Son's financier at Deutsche Bank. The early success of the Vision Fund, which initially boasted returns of 29 percent while establishing itself as the largest and certainly most flamboyant investor in early-stage tech companies, clearly strengthened those bonds.
But that was before the WeWork implosion, where Softbank was the company's largest investor, prompting Son to spend billions of dollars to bail out the office-space provider as it was heading toward insolvency. Another high-profile black mark on the Vision Fund involved its investment in ride-sharing company Uber, which has floundered since its initial public offering last May (though people close to the Fund are quick to point out no money was lost on Uber).
The dueling headaches brought significant scrutiny to Misra and Vision Fund's freewheeling investment style, its massive portfolio of more than 80 companies, not to mention less prominent missteps. Then came a series of somewhat unflattering profiles of Misra that underscored these issues along with his various eccentricities (such as his penchant to chain-smoke cigarettes and saunter around his office in bare feet) that did not sit well with his boss.
Of course, it's a stretch to lay the WeWork blame on Misra since it was Son's near obsession with the company and its former CEO Adam Neumann that led to Vision's ill-fated WeWork foray and SoftBank's eventual bailout. But aside from the bad press, Son is said to be angered at other miscues of the Vision Fund, prompting an unusual public apology from him for "bad investments."
Misra appears to understand that his boss isn't happy and that Vision needs to change its ways. He has recently imposed a new investing discipline at the Vision Fund that has led to bailing on at least three companies that the fund had been looking to invest in: Honor, a home care service for senior citizens; Seismic, a sales software company; and Creator, which builds hamburger-making robots. Misra has also announced layoffs of the staff of 300 that he built since taking over in 2017.
Whether this is enough to save Misra's job depends on who you speak to. Veteran tech and telecom entrepreneur Peter Adderton says, "Masa doesn't kill executives slowly, he sticks the knife in fast … I can't see how Misra, who has overseen the Vision Fund's disastrous investments, is long for this world. Investors always need someone to take the fall and Masa won't be falling on his sword."
Tech analyst Walt Piecyk of LightShed Partners, a research firm focused on tech, media and telecom said: "Investors would likely applaud a change in management given the struggles at the Vision Fund this year." Piecyk predicted Misra will depart this year, in his annual 2020 outlook column published in December.
But inside SoftBank, the word is Misra will be around at least for the near term and probably even longer, and that his rift with Son is overblown. Misra is said to have an ironclad contract that all but mandates that he runs the Vision Fund "as long as there is a Vision Fund."
A SoftBank spokesman declined to comment on the contract's terms.
Moreover, Misra hired much of the investment fund staff and is the point man in the sale of a second Vision fund to outside investors.
"If [Misra] leaves, the fund stops tomorrow,” a person close to Misra tells FOX Business. "There are other smart people in the Fund but they're not investors" of his caliber.
People inside SoftBank say the second Vision Fund has aspirations to surpass the first one in size, but it has attracted little outside money despite reports of "commitments" from major tech companies like Microsoft and Apple. To date, possible interest from other investors such as the Saudi sovereign wealth fund known as Public Investment Fund (PIF), and the Abu Dhabi government fund, Mubadala, have yet to materialize into a formal commitment.
Both were the top two outside investors in the first Vision Fund, and winning their commitments would certainly help dispel speculation that Misra is leaving SoftBank.
People close to the Vision Fund say Misra has been in constant talks with the Saudi Kingdom’s Crown Prince Mohammed bin Salman, and is growing confident he will win a significant investment from PIF in the near future. Misra, these people say, was in Saudi Arabia a few weeks ago pitching Vision Fund business and plans to be back in the Middle East later this month to meet with the people from Mubadala.
The terms and fee structure under discussions with PIF and Mubadala is said to reflect the concerns over the WeWork implosion and other issues the Vision Fund has faced, these people add. Still, Misra is said to believe he's close to obtaining a major commitment from both the PIF and Mubadala, which sunk $45 billion and $15 billion, respectively, in the first Vision Fund.
"The crown prince doesn’t get out of bed for $5 billion," said a person close to Misra.