The losses are piling up for the $100 billion SoftBank Vision Fund.
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The Vision Fund, run by Masayoshi Son, Japan’s second-richest person who has a net worth of $24 billion, will invest another $5 billion into the office-sharing company WeWork, the Nikkei Asian Review reports. The company will run out of cash by November without securing more funding.
SoftBank has already invested $11 billion in WeWork, and is said to be facing a writedown of about $2 billion. The breakeven on that investment is seen at a $24 billion valuation.
Last month, WeWork shelved plans for its initial public offering as its market value was seen at around $10 billion to $12 billion – well below the $47 billion valuation that SoftBank last invested. More recently, WeWork’s valuation has been seen at about $7 billion.
WeWork isn’t the only Vision Fund investment that has struggled.
SoftBank is facing a potential $4 billion writedown on its investment in Uber. Since going public at a valuation of around $82 billion in May, Uber shares have lost almost 25 percent of their value. Analysts were initially expecting the IPO to fetch a valuation of up to $120 billion. The Vision Fund in 2017 took a 13 percent stake in the ride-hailing company at a price tag of $7 billion.
The jury is still out on Softbank’s $19 billion Sprint investment, the fate of which hinges on the outcome of a potential deal with T-Mobile. Sprint and T-Mobile in April 2018 announced a $26.5 billion deal, but its closing has been held up due to antitrust concerns. SoftBank will be on the hook for Sprint’s $39 billion debt load if the deal falls apart.
Not all of SoftBank’s investments have been a disaster.
The company made the best tech investment on record when, in 2000, it invested $20 million in Chinese e-commerce giant Alibaba. SoftBank booked a pre-tax profit of about 1.2 trillion Japanese yen ($11.12 billion) in June, when it sold shares in the company for the first time in 16 years. It still owns a stake worth more than $100 billion.