SoftBank posted an operating loss of JPY 225.1 billion (USD 2.1 billion) from its USD 100 billion Vision Fund for the three months ended December 2019, down from the JPY 176.4 billion (USD 1.6 billion) of profit it recorded in the same period in 2018.
The company attributed the drop to the decrease in the fair values of investments it held at the end of the third quarter, including Uber and WeWork. This pulled down the company’s overall operating profits to JPY 2.6 billion (USD 24 million), a 99.4% decrease from JPY 438.3 billion (USD 4 billion) it reported in the same quarter last year. The figure also counts the JPY 332 billion (USD 3 billion) dilution gain related to Alibaba’s secondary listing in Hong Kong.
The loss from the Vision Fund segment was offset by JPY 227.7 billion (USD 2.1 billion) of operating income the Japanese conglomerate raked in for the quarter, excluding results from its funds.
SoftBank also recorded net income of JPY 124.3 billion (USD 1.1 billion), coming from the JPY 703.8 billion (USD 6.4 billion) it posted in the same year-ago quarter.
The Vision Fund had invested USD 74.6 billion in 88 companies in Q3, with fair value amounting to USD 79.8 billion, excluding exited investments. Investees Vir Biotechnology and OneConnect also became publicly listed issuers during the quarter.
SoftBank Vision Fund began its operations in 2017, making large investments in potential high-growth companies, particularly in unicorns.
In July 2019, the company announced its plans to establish another mega fund to accelerate AI development. The expected size of the fund is USD 108 billion after the company roped in potential investors such as Apple, Foxconn, Microsoft, and the National Investment Corporation of the National Bank of Kazakhstan.
However, SoftBank completed the initial close for Vision Fund 2 at just USD 2 billion, as investors were shaken up by WeWork’s failed attempt at going public.
The company is also facing bigger investment woes as Indian hospitality startup Oyo, one of its portfolio companies, recently laid off about 600 employees in China and roughly 1,200 staff in India as it restructures its operations.
This article first appeared in Tech in Asia.