SoftBank’s Struggling Vision Fund On Track To Lose $16.5B

SoftBank Group Corp. is forecasting that its $100 billion Vision Fund will lose $16.5 billion in the financial year ending March 31, which means the group as a whole will lose money for the first time in 15 years, according to a company statement on Monday (April 13).

Masayoshi Son, chief executive officer of SoftBank, pointed to “the deteriorating market environment” amid the coronavirus pandemic as the reason for the fund’s loss. The group is expecting an operating loss of  ¥1.35 trillion and a net loss of ¥750 billion for the year ended March 31, according to the statement. In the same time period the previous year, the company showed a ¥1.41 trillion profit.

The losses are a “major blow” to Son, who is looking to kickstart his reputation among bankers, backers, stakeholders and investors, according to a CNBC report. SoftBank said it was expecting to lose $7.4 billion on WeWork, OneWeb and on other investments outside the fund. Satellite firm OneWeb filed for bankruptcy in March after SoftBank pulled funding.

SoftBank launched its Vision Fund in 2017 with the backing of Saudi Arabia and Abu Dhabi. The fund invested in rideshare giant Uber Technologies and office-share firm WeWork, both of which have seen financial difficulties. SoftBank ended up having to write down billions over the past several months.

SoftBank and WeWork are embroiled in a legal battle after the Japanese tech conglomerate backed out of a $3 billion rescue plan. The office-sharing giant has accused SoftBank of breach of contract.

“Instead of abiding by its contractual obligations, SoftBank, under increasing pressure from activist investors, has engaged in a purposeful campaign to avoid completion of the tender offer,” WeWork said in a statement.

Following WeWork’s failed initial public offering last September, SoftBank had agreed to a bailout. Recently, however, SoftBank has been busy trying to raise $10 billion for its Vision Fund to help combat the coronavirus pandemic. Falling oil prices caused strife among Middle Eastern investors, and many companies are saying they’ll have trouble surviving.