SoftBank’s first big challenge has to do with its assets—and in particular its ability to monetise them
, at the height of the pandemic boom in all things digital, Son Masayoshi embodied in the flesh the futuristic promise of global tech. The flamboyant founder of SoftBank Group, a telecoms-and-software firm turned tech-investment powerhouse, reported the highest ever annual profit for a Japanese company, driven by soaring valuations of the public and private technology darlings in its vast portfolio.
On May 12th SoftBank reported a net loss of ¥1.7trn for the latest financial year ending in March, caused primarily by a ¥3.7trn write-down in the net value of its flagship tech investments . Its public holdings, most notably in Alibaba, a Chinese e-commerce giant pummelled by the Communist Party’s crackdown on the technology industry, are losing their shine.
. The pipeline of initial public offerings from its $100bn Vision Fund and its smaller sister, Vision Fund 2, is drying up. That makes it harder for Mr Son to realise gains on its early investments in a string of sexy startups. Oyo, an Indian hotel startup backed by SoftBank, unveiled plans in October to raise $1.1bn from a listing, but more recent reports suggest that the company could cut the fundraising target or shelve the plan altogether.
The price of credit default swaps against SoftBank’s debt, which pay out if the company defaults, tell a different story. Across most maturities from one year to ten years, the swaps have only been more expensive once in the past decade—during the market turmoil of March 2020, as countries went into the first pandemic lockdowns .
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