SoftBank’s Vision Fund 1 Closes Investment Period, Gears Up For Fund 2

Adam Neumann speaks onstage at a We Work event at the Microsoft Theater in Los Angeles

The investment conglomerate said its $100 billion Vision Fund recorded an unrealised loss of 537.9 billion yen for the six months as the value of its tech bets such as WeWork and Uber tumbled.

The operating loss of ¥704.4 billion in the three months ended September 30 easily surpassed the ¥230.8 billion average of analysts' projections, and compared with a ¥705.7 billion profit a year earlier.

The loss compared with an operating loss of 48 billion yen forecast on average by four analysts, according to Refinitiv.

Office messaging platform Slack, precision cancer medicine company Guardant Health and several other publicly traded companies in the Vision Fund portfolio also saw their stock values decline last quarter.

As IBD reports, WeWork caused the fund to take a 497.7 billion yen ($4.6 billion) hit.

"I regret it in many ways", Mr. Son said at a news conference in Tokyo after SoftBank released its earnings.

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Now, the losses call into question billionaire Masayoshi Son's investment strategy just as he's trying to raise an even larger successor to his original mega fund. He said the company had "special circumstances", but in general SoftBank wouldn't put more funds into companies in which it had invested simply to rescue them from failure. The new standards will apply to future investments made by SoftBank, and the Vision Fund is in discussions about how it can adopt some of the measures, according to the Financial Times.

Last month, SoftBank confirmed that it was injecting billions of dollars into WeWork, once hailed as a shining unicorn valued at $47 billion at the start of the year.

WeWork's parent, the We Company, was forced to abandon an initial public offering of its shares on U.S. stock markets at the end of September after investors queried the huge valuation given to the office space rental company.

Mr. Son said WeWork was on the road to recovery by cutting costs and eliminating unprofitable units. The deal includes $1.5 billion in warrants, up to $3 billion in stock purchases, and $5 billion in debt financing.

Before the bailout, the Vision Fund and SoftBank had already invested almost $11 billion into WeWork. "We are fully committed to improving the business and ensuring our long-term viability to the benefit of our landlords, members, and employees".

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