"Vision Fund's Record Losses: SoftBank Founder Son Personally on the Hook for $5.2 Billion"

 

SoftBank Group Corp.'s Vision Fund venture capital arm has reported a record loss of ¥4.3 trillion ($38.7 billion) for the fiscal year, which ended in March 2021. This comes as a result of losses on unlisted startups in its portfolio, despite a global rebound in equities. Founder and CEO of SoftBank, Masayoshi Son, is personally on the hook for about $5.2 billion on side deals he set up at the company to boost his compensation. His unrealized losses widened by about $130 million from three months before, with most of the deficit linked to the Latin America fund. Son owns portions of the company's key investment vehicles, sparking controversy due to corporate governance concerns. However, the Japanese billionaire has denied any conflict of interest.

Son holds a 17.25% stake in a vehicle set up under SoftBank's Vision Fund 2 for its unlisted holdings, as well as a 17.25% stake in a unit within the company's Latin America fund, which also invests in startups. He also has a 33% stake in SB Northstar, a vehicle set up at the company to trade stocks and derivatives. His remaining deficit at SB Northstar was ¥246.9 billion ($1.8 billion).

While there is no immediate deadline for repayment, the value of Son's positions could improve in the future. For SB Northstar, Son has already deposited some cash and other assets. He would pay his share of any "unfunded repayment obligations" at the end of the fund's life, which runs 12 years with a two-year extension.

Son's net worth stood at $8.9 billion after adjusting for his deficit from his interests in SB Northstar, Vision Fund 2, and the Latin America fund. SoftBank shares dropped in early Friday trading in Tokyo after the financial results. The stock fell as much as 5.5%, its biggest fall in about two months. Investors were also on the lookout for a buyback, which did not materialize.