SoftBank Group reported its first quarterly loss in 14 years on Wednesday, with its giant Vision Fund suffering a JPY 970 billion ($8.9 billion) loss on falling valuations of top tech bets such as WeWork and Uber.
The depth of the loss cast doubt on founder Masayoshi Son's high-risk strategy of investing in cash-burning startups, as he is trying to raise a second massive investment fund.
The Japanese investment powerhouse posted an operating loss of JPY 704 billion ($6.5 billion) in the July-September quarter compared to a JPY 706 billion profit in the same period a year earlier and a JPY 48 billion loss forecast by analysts, according to Refinitiv.
The fair value of SoftBank's investment in WeWork decreased by $3.4 billion in the second quarter.
The Saudi Arabia-backed Vision Fund, which is run by ex-Deutsche Bank banker Rajeev Misra, has invested $70.7 billion in 88 companies at the end of September. Those investments are now worth $77.6 billion excluding exits, it said.
With increased market scrutiny over the path to profitability for many of its bets on unproven startups, SoftBank is struggling to take them to market - an essential step to unlock capital to keep its investment juggernaut growing.
At Uber that slide has continued as losses continue to mount and a post-IPO share lock-up ends, with its shares hitting new lows this week.
SoftBank's investing activities are propped up by other pillars of Son's empire including domestic telco SoftBank, which on Tuesday reported a 9 percent rise in second-quarter operating profit, beating estimates, buoyed by its cash-cow mobile business.
SoftBank did not release a forecast for the current business year, saying there were too many uncertain factors.
© Thomson Reuters 2019