Softbank’s second Vision Fund set to come in underweight
The giant Japanese investment fund Softbank is dialing down its ambitions for the second of its Vision Funds after failed bets on firms such as Wework and Uber dragged the company to its first quarterly loss in 14 years.
Softbank’s first Vision Fund two years ago raised around $100bn (£76bn) from backers including the Saudi Arabian government, creating the largest private equity fund in history.
Read more: Wework lays off 2,400 employees in Softbank-led efficiency drive
Yet problems at some of the firms it splurged on, in particular a $3.4bn downgrade of its investment in co-working firm Wework, saw the fund lose $8.9bn in the third quarter of the year.
Softbank’s second Vision Fund is now expected to come in significantly underweight compared to the $108bn target originally planned, sources told the Sunday Telegraph.
The firm’s chief executive Masayoshi Son last month admitted poor investment judgment. He also said he had turned a blind eye to problems with the way Wework’s chief Adam Neumann was running the company.
Yet Son said Wework remained a solid business. He said he was confident there would be a “hockey stick” recovery in its profits.
Later on last month Softbank completed a money-raising drive for Vision Fund 2, bringing in roughly $2bn, Bloomberg reported.
A Softbank Vision Fund spokesperson said: “Fundraising is progressing as expected as external investors assess potential commitments to Vision Fund 2.”
Son drew criticism for the scale of the third-quarter loss, leading him to apologise to investors. “My investment judegment was poor in many ways and I am reflecting deeply on that,” he said following the results.
The value of most of the Vision Fund’s listed investments, such as Uber, Slack and Guardant Health dropped over the quarter.
Read more: Vision Fund’s Wework splurge drags Softbank to $6.4bn loss
Softbank declined to share a forecast for the current business year, citing too many uncertainties.
Michael Hewson, chief market analyst at CMC Markets, said at the time that this raised “uncomfortable questions as to what other nasties could be on the way”.