After WeWork debacle, SoftBank suspends plan for second Vision Fund

The firm had sought to raise $108B, but was also stung by Uber’s underwhelming public offering and will seek to finance a smaller bridge fund

Feb.February 12, 2020 10:04 AM
Softbank CEO Masayoshi Son (Credit: Getty Images)

Softbank CEO Masayoshi Son (Credit: Getty Images)

SoftBank has abandoned plans to raise $108 billion for its second Vision Fund, after investments in WeWork and Uber have scared off potential investors.

Instead, the Japanese technology conglomerate will seek to finance a smaller bridge fund on its own for the next couple of years, before building a second Vision Fund, founder and CEO Masayoshi Son said Wednesday, according to Bloomberg.

“After a lot of reflecting, it seems right that the scale is somewhat reduced this time,” he said during a press conference in Tokyo to discuss earnings, according to the report. “We can start slightly smaller for the next year or two with a kind of bridge fund and build on those results to raise a second fund.”

The announcement comes as activist investor Elliott Management has quietly amassed an almost $3 billion stake in SoftBank, and has begun pushing for changes at the company, including share buybacks and increased governance and transparency. Elliott believes SoftBank’s shares are undervalued in comparison to its assets.

Son welcomed Elliott’s increased role, and said Wednesday, “we are basically in agreement on carrying out large buybacks when the finances allow it.”

SoftBank Group said it earned a small operating profit of $24 million in the last quarter of 2019, down from $3.1 billion during the same period in 2018, according to Bloomberg. The Vision Fund lost $2.05 billion in the last quarter of 2019.

Those investments were largely affected by the downfall of WeWork, and the underwhelming performance of Uber’s public offering. Previous Vision Fund investors, including Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala Investment, remain noncommittal to a new fund.

There was some good news for SoftBank on Wednesday, as shares closed 12 percent higher in Tokyo ahead of the earnings, boosted by the announcement its sale of Sprint to T-Mobile US won approval from U.S. regulators. Its shares are up 21 percent this year. [Bloomberg] — David Jeans

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