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SoftBank Group takes a defensive stand after $34 bn loss, to fund smaller deals

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After recording a loss of $34 billion in market value over the last year, SoftBank Group has taken a defensive stand and will fund fewer and smaller deals. Masayoshi Son, SoftBank Group founder, said the company would continue to target mid-to-long-term growth by investing in the AI sector.

Last month, Son cited the COVID-19 pandemic and Russia’s invasion of Ukraine, as well as China’s crackdown on private businesses and rising interest rates to push the world into a chaotic situation. He said this is why SoftBank should take a defensive approach. The Tokyo-based conglomerate lost more money in its last fiscal year than it ever has – $13.2 billion. This marked SoftBank Group’s biggest-ever full-year loss.

To tackle the loss, SoftBank Group will cut back its pace of new investments. Son assured investors that the company’s debt levels were manageable, and cash holdings were sufficient to cover coming bond maturities. Moreover, SoftBank still has gained in its giant tech fund. In fact, it had boosted its cash holdings through borrowing and the sale of stock.

SoftBank’s Vision Fund 2 investments in 2022 amount to around USD 100 million to $200 million. It was disbursed over 50 funding rounds. The SoftBank Group is currently invested in 475 companies and its consolidated financial statement reported USD 25.2 billion in investment losses.

Son said the Vision Fund has made just $3.1 billion on the $45.6 billion it invested in its publicly listed companies. Vision Fund 2 is stated to be an unusual move for a venture capital fund given the high risks involved. It has raised additional money through financial instruments tied to its nearly 25% stake in the Chinese e-commerce giant Alibaba Group Holding.

Son apologized to investors and said the company must be more careful when investing new money. Son reassured investors who are concerned about SoftBank’s debt levels. He told them that the company is closely managing its debts and cash.

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