SoftBank mulls exit options as Vision Funds lose $39B

SoftBank CEO Masayoshi Son (Tomohiro Ohsumi/Getty Images)
SoftBank's Vision Fund segment has filed a record loss of 5.3 trillion Japanese yen (around $39 billion) for the fiscal year ending March 31, and founder Masayoshi Son has said his company has switched to "defense mode," prioritizing exits over new investments.

The report dwarfs the $27 billion loss posted a year ago, which at the time was attributed to a combination of falling tech stocks, rising inflation, interest rate hikes and the war in Ukraine. Many, if not all, of those issues remain factors that continue to batter the Japanese investment giant.

The group, which reported an annual net loss of over $7.2 billion, also blamed rising tensions between the US and China and the failure of Silicon Valley Bank for worsening market conditions. Yoshimitsu Goto, SoftBank's CFO, said the group would be slowing down new investments and instead focusing on reducing debt and selling down assets: The firm was said to be selling early-stage VC unit SoftBank Ventures Asia in April. At the same time, Goto said the company remains ready to capture opportunities in the generative AI space.

Some of the group's pending exits include the US listing of UK chipmaker Arm—a transaction that has already been more than a year in the making after a failed attempt to sell the business to Nvidia. The company is also looking to reduce its stake in Chinese ecommerce group Alibaba and is nearing a deal to sell Fortress Investment Group to Mubadala for $3 billion, according to reports.

"There is a significant amount of time remaining on the [Vision] fund lifecycles, so any hope of pulling out of the losses is left in the hands of a market rebound in the next five years or so," said Kyle Stanford, a senior analyst at PitchBook. "Their IRR might not end up as shiny as hoped, but there is still time for returns to be made on their unicorn investments."

Irrespective of macroeconomic volatility, Softbank's Vision Fund segment has experienced a number of high-profile failures over the past two years. Among the most notable were scandal-plagued UK lender Greensill Capital and cryptocurrency platform FTX. Other bankruptcies include US construction startup Katerra and KServicing, the loan servicer that held loans made by online lender Kabbage. More recently, Pear Therapeutics filed for Chapter 11 bankruptcy protection.

This article originally appeared on PitchBook News