SoftBank Vision Funds Suffer $3.86 Billion Loss in First Half Amid Tech Sector Turbulence

Japanese conglomerate and investment heavyweight SoftBank Group Corp's Vision Funds have encountered significant investment losses, tallying 583.3 billion yen or approximately $3.86 billion for the first half of the current fiscal year. These funds are specifically known for their strong focus on the technology sector, having placed considerable bets on a myriad of tech and tech-enabled companies across the globe.

Portfolio Performance and Decline in Valuations

The reported losses stem largely from the reduced performance and lower valuations of key investments. Notably, there has been a pronounced downturn in the shares of NVDA Nvidia Corporation, a prominent player in GPUs and SoCs, and DASH DoorDash, Inc., which operates a substantial logistics platform. These are joined by slumps in other significant holdings such as SNTMF SoftBank Group Corp's own stocks, SYM Symbotic, SFTBF SoftBank's foreign investment shares, WEWOW WeWork, and VIR Vir Biotechnology, Inc., with the latter focused on developing treatments for infectious diseases.

The distress in share values has had a direct impact on the Vision Funds' performance. Vision Fund I experienced a 3.7% sequential decrease in the fair value of its investments by September's end, with sectors taking hits including artificial intelligence and biotechnology. Vision Fund II fared worse with a 7% quarter-on-quarter dip, influenced by setbacks in the robotics sector and WeWork's Chapter 11 bankruptcy proceedings.

The Impact of Foreign Exchange and Consolidated Figures

SoftBank's Vision Funds have not only navigated through choppy valuations but also confronted a foreign exchange loss to the tune of 648 billion yen, consequent to a weaker yen against the U.S. dollar and liabilities denominated in FOREX:USD. Excluding certain gains such as those from Arm's initial public offering, the Vision segment saw the aforementioned loss of 583.3 billion yen. Nonetheless, accounting for these gains, there is a recorded profit of 181 billion yen for the same duration at the segment level—though this figure is not reflected on the consolidated balance sheet.

As the fair value of both public and private portfolio companies receded, driven by the declining stock prices of several holdings, the resulting investment loss for the previous year reached a stark 5.32 trillion yen. With this backdrop, the just concluded second-quarter saw the Vision funds posting a loss of 258.9 billion yen or $1.7 billion, an improvement over the 1.02 trillion yen loss from the prior year's corresponding period. The overall picture for SoftBank Group Corp in Q2 shows a net loss of 931 billion yen, which, despite being significant, is smaller in comparison to the 3.03 trillion yen net loss it faced in the same quarter of the previous year.

With almost $142 billion directed into technology ventures through both funds, Vision Fund I has brought in returns of $104.4 billion since its 2017 inception. Vision Fund II, launched in 2019, has accrued $31.5 billion to date. These numbers reflect the high-stakes game that SoftBank plays in the tech investment arena, amidst an environment of fluctuating valuations and market unpredictability.

SoftBank, VisionFund, InvestmentLoss, TechnologySector, MarketVolatility