SoftBank’s Vision Fund has prompted massive writedowns

Someone needs to tell SoftBank boss Masayoshi Son that unicorns are generally drawn without wings. Yesterday the Japanese tech group claimed its investments in billion-dollar-plus “unicorn” start-ups were on the ascent by using a picture of unicorns toppling off a cliff into the “valley of coronavirus” and then magically flying out of the abyss. Mr Son’s visual aid was an attempt to dull the blow of a historic annual operating loss of ¥1.3 trillion ($13 billion) in the year to March. A more successful, albeit expensive, fix came by doubling the amount spent on share buybacks. Such short-term measures will have limited impact if SoftBank keeps beating its own dire records. The Vision Fund’s overvalued tech investments — which include WeWork and Uber — have prompted massive writedowns and added to the fund’s ¥1.9 trillion ($17.7 billion) unrealised losses. Of 88 portfolio companies, 50 have recorded a decrease in fair value… Mr Son is confident that a few of his investments will eventually soar above the pandemic and provide 90 per cent of future value in a decade’s time. This is wishful thinking. SoftBank’s unicorns are more likely to plod along than fly. 

Lex.

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