The slump in technology valuations weighed on the financial performance of Softbank Corp. (SFTBY), which posted two consecutive years of losses. The Japanese investment holding company delivered a net loss of 970 billion Yen, or $7.18 billion, for the fiscal year ended March 31. Nonetheless, it compared favorably to the prior year’s net loss of 1.7 trillion Yen.
Vision Fund Delivers Massive Unrealized Losses
The company’s popular Vision Fund, a technology-focused venture capital fund that invests in high-profile technology companies, reported an investment loss of 5.32 trillion Yen. The massive investment loss reflects weakness in tech valuations due to rising interest rates and an uncertain macro environment.
While Softbank’s complete exit from Uber Technologies (NYSE:UBER) added cushion, unrealized valuation losses from the declines in the share prices of a wide range of portfolio companies weighed on it.
After aggressively investing in tech companies and losing substantial value, Softbank’s CEO, Masayoshi Son, is in defense mode. As a result, he has been exiting Softbank’s stake in several portfolio companies to raise cash and pay down interest-bearing debt.
The market is buzzing with rumors that Softbank is nearing a deal to sell Fortress, an asset management firm, to Abu Dhabi sovereign wealth fund Mubadala. The deal could be announced later this month and might generate a value of less than $3 billion. SoftBank acquired Fortress for about $3.3 billion in 2017.
While Softbank is being watchful regarding its investments, the uncertain global macroeconomic environment indicates that the value of its technology holdings could remain subdued, at least in the near term. This suggests that 2023 could be another challenging year for the Japanese investment giant.
