SoftBank’s Vision Fund eyes massive loss

WeWork’s biggest backer predicts it will be $17B in the red

Masayoshi Son (Credit: Tomohiro Ohsumi/Getty Images, iStock)
Masayoshi Son (Credit: Tomohiro Ohsumi/Getty Images, iStock)

SoftBank is preparing its shareholders for what executives think could be one of its worst fiscal years in the conglomerate’s 39-year history.

Masayoshi Son’s company expects its $100 billion Vision Fund— which includes a massive investment in WeWork — to record a $16.6 billion loss for the fiscal year, according to the Wall Street Journal. For Softbank, a big share of thoses woes stem from WeWork’s failed IPO late last year, and the co-working firm’s skyrocketing debt.

But overall, SoftBank blamed Vision Fund’s enormous losses on a “deteriorating market environment,” the Journal reported.

The company launched the tech-focused Vision Fund in 2017, and has poured billions into companies that also include Compass and Uber. The sovereign wealth funds of Saudi Arabia and Abu Dhabi were among the Vision Fund’s biggest investors. Softbank didn’t break down the losses by company, according to the report.

The coronavirus pandemic has no doubt dealt a blow to the Vision Fund-backed companies — Oyo Hotels & Homes will freeze operations and lay off workers in response to the pandemic — but the real trouble began last year.

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Uber’s IPO was underwhelming and WeWork’s planned public offering fell apart when it became clear the company wasn’t worth as much as $47 billion valuation.

SoftBank at first swooped in to bail out the co-working company, but recently reversed-course on a planned $3 billion stock buyback. Now, WeWork is suing its biggest investor.

Meanwhile, the fund’s dismal performance has taken a toll on Softbank. In February, it suspended plans for a second Vision Fund and last month, it bought back billions of dollars in shares in an attempt to buoy its falling stock price. Still, it remains under pressure from shareholders.

SoftBank’s final numbers will likely change from its current projections, the company said. [WSJ] — Dennis Lynch