9984.T - SoftBank Group Corp.

Tokyo - Tokyo Delayed Price. Currency in JPY
5,492.00
+141.00 (+2.64%)
As of 12:57PM JST. Market open.
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Previous Close5,351.00
Open5,490.00
Bid5,492.00 x 0
Ask5,489.00 x 0
Day's Range5,486.00 - 5,575.00
52 Week Range3,958.00 - 12,025.00
Volume14,110,100
Avg. Volume13,446,554
Market Cap11.376T
Beta (5Y Monthly)1.63
PE Ratio (TTM)37.94
EPS (TTM)144.75
Earnings DateMay 07, 2020 - May 11, 2020
Forward Dividend & Yield44.00 (0.84%)
Ex-Dividend DateMar 30, 2020
1y Target Est13,753.00
  • Reuters

    Tokyo stocks rise to one-week high as weaker yen boosts exporters

    Japanese shares rallied to a one-week high on Thursday as a rapidly weakening yen, which hit a near 10-month low versus the dollar overnight, lifted wide-ranging exporters, such as automakers. All but four of the 33 sector sub-indexes on the Tokyo Stock Exchange were trading in positive territory, with mining , paper and pulp and transport equipment being the top three performers. The yen dived to its lowest level since early May versus the dollar of 111.60 yen overnight, providing a tailwind for Japanese exporters as a weaker local currency boosts corporate profits when they are repatriated.

  • SoftBank Climbs on Plan to Borrow $4.5 Billion Via Telecom Stock
    Bloomberg

    SoftBank Climbs on Plan to Borrow $4.5 Billion Via Telecom Stock

    (Bloomberg) -- SoftBank Group Corp.’s stock climbed after it unveiled plans to borrow as much as 500 billion yen ($4.5 billion) by putting up shares of its Japanese telecom unit as collateral, raising capital for the investment giant’s operations.The money for the two-year loan, which will have a one-year extension option, will come from 16 financial institutions, SoftBank said in a statement. It pledged as much as 953 million shares of SoftBank Corp. and said the money will be used to fund operations. SoftBank Group’s stock rose as much as 3.6% in Tokyo, while the unit’s was little changed.Activist investor Paul Singer this month revealed his firm had acquired a stake of as much as $3 billion in SoftBank and has advocated for a share buyback of as much as $20 billion, along with governance changes and more transparency about its investments. SoftBank founder Masayoshi Son called Singer’s Elliott Management Corp. an “important partner” and said he is in broad agreement with the investor about SoftBank buybacks and share value.SoftBank will need to raise cash to meet those demands. Son is adopting a more conciliatory stance just as he’s struggling with the $100 billion Vision Fund, which made him the biggest investor in technology. The fund lost money in the three months ended in December, one quarter after the meltdown at WeWork triggered a record loss for the Japanese company. Son is trying to raise capital for a second fund, but last week said he is no longer targeting $108 billion and SoftBank may finance the effort on its own.“We sense that the stars are now aligned for the firm to conduct a buyback,” Citigroup Global Markets analyst Mitsunobu Tsuruo wrote. SoftBank “will be in a position to flexibly implement a buyback amounting to” about 5% of its market capitalization.Read more: SoftBank’s Son Considers a ‘Bridge’ Fund Before Vision Fund 2The past 12 months have been tumultuous for Son and SoftBank. A year ago, the company unveiled a record buyback, sparking a rally that pushed shares to the highest since its dot-com peak in 2000. Uber Technologies Inc.’s disappointing public debut and the implosion of WeWork wiped out the gains over the next few months. But SoftBank surged again this month after Singer disclosed his stake and Son won approval to sell his Sprint Corp. to T-Mobile US Inc.SoftBank has 13.75 trillion yen of interest-bearing debt, with more than 2.6 trillion yen of bonds coming due in the next three years. The company also had 3.8 trillion yen of cash and equivalents as of the end of December.To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.netTo contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Edwin Chan, Colum MurphyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Fortress Said to Increase Offer to Purchase Mt. Gox Claims
    Bloomberg

    Fortress Said to Increase Offer to Purchase Mt. Gox Claims

    (Bloomberg) -- Fortress Investment Group LLC increased its offer to purchase creditor claims from the defunct Mt. Gox cryptocurrency exchange in the wake of this year’s Bitcoin rally.The private-equity and hedge-fund firm sent letters this week to creditors offering $1,300 per Bitcoin, or 88% of its estimated account value, according to the one-page proposal, which Bloomberg News obtained from a person who said they weren’t authorized to speak on the matter. In December, the firm offered $755, and when Bitcoin traded lower, it dropped the price to as little as $600 per Bitcoin last March.Based in Japan, Mt. Gox was once the world’s biggest Bitcoin exchange, until it closed in early 2014 after losing the coins of thousands of customers. Thousands of Bitcoins have since been found, and a trustee is working to reimburse creditors. The reimbursement is being delayed by lawsuits.Michael Hourigan, a managing director at Fortress, said in the letter that firm is making the discount offer “due to the likely timeline (3 to 5 years) and financial risk of the ongoing litigations” involved in getting money from Mt. Gox.Bitcoin has rallied about 40% since the beginning of the year to cross $10,000.To contact the reporter on this story: Olga Kharif in Portland at okharif@bloomberg.netTo contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka, Rita NazarethFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Japan’s Largest Bank Invests Over $700 Million in Grab
    Bloomberg

    Japan’s Largest Bank Invests Over $700 Million in Grab

    (Bloomberg) -- Japan’s Mitsubishi UFJ Financial Group Inc. is investing more than $700 million in Southeast Asian ride-hailing giant Grab, gaining access to millions across the region that use the mobile app to book cars and meals.The Japanese financial institution intends to market a range of financial services from insurance to loans to Grab’s users, said a person familiar with the deal who was not authorized to discuss the matter publicly.Grab, one of several ride-hailing giants backed by SoftBank Group Corp., is trying to build a regional super-app that offers a range of services including finance, payments and rides. The startup, one of Southeast Asia’s largest, doesn’t disclose its number of users -- which include many for food delivery -- but said its app has been downloaded onto more than 166 million mobile devices in the region. The car-hailing giant, which has taken in more than $2.6 billion from SoftBank alone, is on the hunt for more capital as it builds out and markets new services.MUFG and Grab intend to announce their alliance soon, the Nikkei reported earlier, citing unidentified people. A Grab representative had no immediate comment when contacted.Japan’s most valuable lender has been trying to build up its franchise in Southeast Asia, which it sees as an important growth driver to offset a slowing domestic market. Last year, the lender completed the takeover of PT Bank Danamon Indonesia. Incoming Chief Executive Officer Hironori Kamezawa, who was named to the top post last month, is now leading the bank’s digital efforts.Earlier this month, MUFG posted its first quarterly loss in a decade and cut its annual profit forecast after booking a hefty charge on the Indonesian acquisition. Lending profitability is under pressure as Japan heads into its fifth year of negative interest rates. Even so, MUFG’s rivals Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. eked out higher profits last quarter after seeing gains from lending income.MUFG Posts First Quarterly Loss in Decade on Danamon Charge (1)(Updates with details on MUFG from the fifth paragraph)\--With assistance from Yoolim Lee.To contact the reporter on this story: Taiga Uranaka in Tokyo at turanaka@bloomberg.netTo contact the editors responsible for this story: Candice Zachariahs at czachariahs2@bloomberg.net, Edwin Chan, Marcus WrightFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • SoftBank to borrow $4.5 billion pledging domestic telco's shares
    Reuters

    SoftBank to borrow $4.5 billion pledging domestic telco's shares

    SoftBank Group Corp said on Wednesday it plans to borrow up to 500 billion yen ($4.5 billion) from 16 domestic and foreign financial institutions using almost a third of its stake in telco SoftBank Corp as collateral. The loan, which a company spokeswoman said will be used to boost the group's cash on hand and for general business purposes, comes as SoftBank's finances are under pressure on multiple fronts. SoftBank is offering a 20% stake in the telco as collateral for the two-year loan with an option to extend for a further year.

  • SoftBank-backed South Korean ride-hailer Tada gets rare win amid crackdown
    Reuters

    SoftBank-backed South Korean ride-hailer Tada gets rare win amid crackdown

    South Korea's ride-hailing service Tada, a smash hit since its launch just over a year ago, was cleared of transport law violations in court on Wednesday, a rare victory in a market that has been particularly unkind to ride-hailing companies. Since starting up in late 2018, Tada has won 1.7 million users as it capitalised on growing demand and the funding muscle of its Japanese backer SoftBank Group Corp . South Korea restricts ride-hailing to only licenced taxis and bans the use of private cars for the purpose.

  • Reuters

    CORRECTED-India may give reprieve to solar projects delayed by coronavirus fallout

    India will consider extending deadlines for completing solar energy projects to shield developers from stiff penalties after the coronavirus outbreak hit component supplies from China, a top government official said on Tuesday. Ratings agency Standard and Poor's Indian unit, Crisil, warned on Monday that nearly three gigawatts of solar power projects worth $2.24 billion could be at risk of penalties for missing a July 2020 completion deadline as the coronavirus hit solar industry supplies.

  • SoftBank spends $2.5 billion to get second Vision Fund off the ground: sources
    Reuters

    SoftBank spends $2.5 billion to get second Vision Fund off the ground: sources

    The Japanese technology conglomerate is also considering investing another $2.5 billion of its own money, one of the people said. SoftBank Chief Executive Masayoshi Son said last week the company may spend up to two years investing its own money in a bridge fund, to build a portfolio that will give investors enough confidence to participate in a second Vision Fund. To that end, he said SoftBank has already invested "billions" of U.S. dollars, but he did not provide an exact figure.

  • Reuters

    Topix sinks to near 4-month low as Apple warning hurts tech shares

    Japanese shares fell on Tuesday, with the broad Topix index finishing at its weakest in nearly four months, as investors sold tech firms after Apple Inc warned it will likely miss quarterly revenue targets due to the coronavirus outbreak. The benchmark Nikkei average fell 1.4% to a two-week low of 23,193.80, while the Topix index dropped 1.3% to 1,665.71, its lowest close since late October. All but one of the 33 sector sub-indexes on the Tokyo Stock Exchange were trading lower, with electric machinery, metal products and machinery, becoming the worst three performers.

  • SoftBank spends $2.5 billion to get second Vision Fund off the ground - sources
    Reuters

    SoftBank spends $2.5 billion to get second Vision Fund off the ground - sources

    The Japanese technology conglomerate is also considering investing another $2.5 billion of its own money, one of the people said. SoftBank Chief Executive Masayoshi Son said last week the company may spend up to two years investing its own money in a bridge fund, to build a portfolio that will give investors enough confidence to participate in a second Vision Fund. To that end, he said SoftBank has already invested "billions" of U.S. dollars, but he did not provide an exact figure.

  • SoftBank's Latest Fund Wheeze Sets Off New Alarms
    Bloomberg

    SoftBank's Latest Fund Wheeze Sets Off New Alarms

    (Bloomberg Opinion) -- SoftBank Group Corp. became vulnerable to activist attack by Elliott Management Corp. because of the harmful noise generated by the Japanese technology investor’s giant Vision Fund. That noise just won’t die down.Sunday brought a report in the Financial Times that Vision Fund head Rajeev Misra is looking to raise a multi-billion dollar fund to buy listed stocks. The blueprint was established last year with SoftBank’s investment in controversial German payments company Wirecard AG via a convertible bond. The new plan looks like a bid to do more unconventional equity investments in the same vein.The development marks a strategic departure. After all, the $100 billion Vision Fund was established to take stakes in private, tech-focused startups. SoftBank has already had to deny that there’s a “misalignment” between Misra and the group’s founder and Chief Executive Officer Masayoshi Son over the idea of investing more in public companies. But it’s not hard to see why Son, and other SoftBank shareholders, might need persuading.Setting up a listed-equity vehicle would bring in new revenues from management and performance fees. It could also create capital gains (or losses) from any investments in the fund that are made using SoftBank’s own capital. Whether it would make such commitments — and the decision-making around any such moves — is unclear. The FT said funding of about $4 billion is being lined up from sovereign funds in Abu Dhabi and Kazakhstan.There is some logic to Misra’s idea. It would, theoretically, marry SoftBank’s nous in emerging technology with the experience in trading and structured products possessed by a bunch of former bankers working for the Vision Fund. The result could bring a new dimension to SoftBank, similar to how the American buyout giants have become purveyors of real-estate, private-equity and credit strategies.The numbers being spoken of may be small relatively. But SoftBank’s core competence is in a specific sector, technology, and a specific category, late-stage venture capital. It needs to be crystal clear about why it would have an edge in the listed markets. The new offshoot would engage in financial engineering by wrapping listed investments in leveraged structures. But would it be looking to hire people or engage advisers with that expertise in a public-equity strategy if it didn’t already have it on the payroll? Or is the tail wagging the dog?SoftBank shares trade at a near 60% discount to net asset value, hence Elliott’s interest. That’s due largely to high-profile mishaps in the Vision Fund, such as WeWork, even though the fund still accounts for only a 10% slice of SoftBank’s overall managed assets. The risk is that, as with the Vision Fund, this venture has an outsized impact on sentiment toward SoftBank overall.Ironically, SoftBank has a huge opportunity already to dabble in the stock market and do financial engineering. The discount at which its shares trade means it could buy nearly $50 billion of underlying investments by spending $20 billion on its own stock. Son could fund such a buyback either by raising debt or selling some of SoftBank’s shares in Alibaba Group Holding Ltd., Sprint Corp., telecoms subsidiary SoftBank Corp. or even chipmaker Arm Holdings via a public offering. Maybe the brains in the Vision Fund could start by identifying which of these levers to pull.To contact the author of this story: Chris Hughes at chughes89@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Oyo’s Annual Losses Ballooned to $335 Million in 2019
    Skift

    Oyo’s Annual Losses Ballooned to $335 Million in 2019

    Losses for Oyo Hotels & Homes surged to $335 million in fiscal year 2019 compared to $50 million in red ink the year before, as the fast-growing budget hotel chain has been forced to pull back on its sweeping global growth strategy. Overall, the India-based hospitality startup posted a consolidated revenue of $951 million in […]

  • SoftBank-backed Oyo says annual loss grew over six-fold on China expansion
    Reuters

    SoftBank-backed Oyo says annual loss grew over six-fold on China expansion

    SoftBank-backed <9984.T> Oyo Hotels and Homes said on Monday losses widened more than six-fold in the year to March 2019, as the India-based hotel chain spent heavily to expand into China. The news comes weeks after Oyo began laying off roughly 2,000 employees in India, as it inches toward profitability, and days after its major investor SoftBank Group reported dismal quarterly results. The Japanese firm owns about 46% of Oyo.

  • Oyo says annual loss grew over six-fold on China expansion
    Reuters

    Oyo says annual loss grew over six-fold on China expansion

    SoftBank-backed Oyo Hotels and Homes said on Monday losses widened more than six-fold in the year to March 2019, as the India-based hotel chain spent heavily to expand into China. The news comes weeks after Oyo began laying off roughly 2,000 employees in India, as it inches toward profitability, and days after its major investor SoftBank Group reported dismal quarterly results. The Japanese firm owns about 46% of Oyo.

  • Masayoshi Son’s Other Big Real Estate Bet Has Some Real Problems
    Bloomberg

    Masayoshi Son’s Other Big Real Estate Bet Has Some Real Problems

    (Bloomberg) -- Last March, months before the meltdown at WeWork, Masayoshi Son worked through the prospects for another one of his favorite portfolio companies -- a startup from India called Oyo. In a spacious conference hall at his Tokyo headquarters, the Japanese billionaire huddled with lieutenants from the startup and his own SoftBank Group Corp. to brainstorm strategy. He figured Oyo had the potential to disrupt both the staid hotel business and short-term apartment rentals in Japan, according to people in the room.One bullet point scribbled on a floor-to-ceiling whiteboard, in particular, caught Son’s eye: a target of one million rooms within a year. In a burst of enthusiasm, he had everyone sign off on the goals right on the whiteboard, scrawling signatures under the words “BINDING” in all caps, according to a copy seen by Bloomberg News and the people present.Today, the Oyo unit handling apartments has about 7,500 rooms, less than 1% of the whiteboard target. Son’s aspirations turned out to be an example of dramatic overreach, part of a year in which the Japanese investor’s reputation was battered by troubles at WeWork and Uber Technologies Inc.The shortfall, which hasn’t been reported before, signals more trouble ahead for SoftBank and one of its most highly touted investments. Perhaps more concerning, the episode reveals a fundamental flaw in SoftBank’s investment strategy: Pumping billions into startups and pushing them toward outsized growth often undermines promising businesses. With its chaotic rush to expand in Japan, Oyo infuriated potential partners, alienated workers and jeopardized its reputation with local customers, according to interviews with more than two dozen of them. One incensed local customer went so far as to set up an Oyo Life Victims Association account on Twitter. Similar frustrations have been voiced by customers and hotels in India and other overseas markets.The troubles are so pronounced Son faced questions about Oyo during his earnings briefing in Tokyo last week. He conceded there have been “some conflicts with hotel owners,” but said that is normal in such businesses and overall the performance is good. “Oyo is a wonderful company,” he said.SoftBank declined to comment on the startup’s internal issues and practices beyond Son’s comments, but said it believes the company can have a sustainable expansion in Japan with good corporate governance.Oyo, founded by 26-year-old Ritesh Agarwal, has drawn particular attention in SoftBank’s portfolio of startups because of its similarities to WeWork. Both are trying to change traditional real estate businesses with technology. Both have charismatic young founders. Now, skeptics say Oyo could also fall short, further undermining Son’s grand ideas about technology investing.“Oyo is a WeWork in the making,” says Santosh Rao, head of research at New York-based Manhattan Venture Partners. “They need to slow down and pull back.”Oyo says patience is in order. In an interview, Agarwal argues his company is bringing new concepts to a business in need of fresh thinking, especially in markets like Japan. He acknowledges “teething issues” that are to be expected for a fast-growing, innovative startup and defended the use of ambitious goals.“Leaders at Oyo aspire for ambitious targets which act as directional north stars for building for scale,” he said. “From our shareholders perspective, they have said – you have a good business plan, you have continued operating as per your business plan, please keep delivering against that.”SoftBank is the largest outside shareholder at the company, whose backers also include Sequoia India and Airbnb Inc.The last thing Son needs now is another big mistake. He wants to raise capital for a successor to his $100 billion Vision Fund, but potential backers have been spooked by WeWork and Uber, as he conceded last week. At the same time, activist Paul Singer has taken a stake in SoftBank, advocating for changes to boost its share price including a buyback and more transparency.“Son needs to focus on rebuilding his reputation,” says Atul Goyal, senior analyst at Jefferies Group. “If Oyo blows up, that won’t be easy.”Agarwal got the idea for Oyo after roaming around India on a shoestring budget, witnessing first-hand the opportunity to bring order to the anarchic industry. At 19, he set up a reservation website and began working with small hoteliers on service, design and standardized accouterments like bedding and toiletries to draw more travelers. Oyo took 25% of sales.In India, the concept took off. The reassurance of basic quality fostered trust with customers and brought in extra revenue. Enamored of the idea and Agarwal, Son invested in 2015, two years after founding.But as SoftBank started the original $100 billion Vision Fund in 2017 and Son invested in the world’s biggest startups, he began to stoke Agarwal’s dreams with money and ambition, according to people directly involved. Son poured about $1.5 billion into the company and encouraged the young founder to try to become the world’s largest hotel operator by room count. That would mean surpassing Marriott International Inc., founded in 1927.The business model that worked so well in India wasn’t an obvious fit for markets like the U.S. and Europe, which already had well-established hotel chains and largely predictable quality. Yet Agarwal slogged ahead overseas, even buying a few properties outright, including the Hooters Casino Hotel in Las Vegas.Japan was supposed to be like a second home. Son is a local hero and SoftBank’s brand is ubiquitous: It operates one of the largest wireless carriers, runs the leading web portal and owns the Fukuoka SoftBank Hawks, which have won five of the last six baseball championships. SoftBank set up joint ventures through two subsidiaries to promote Oyo’s local business.That support fueled Oyo’s confidence as it entered Japan in early 2019. Agarwal decided to push into both its traditional hotels business and a newer operation called Oyo Life, which offers furnished apartments without the typical hassles of security deposits or guarantors. With Son’s enthusiastic backing at the March meeting, Agarwal and his team set the audacious goal of becoming the biggest operator in both businesses -- in one year.“Many entrepreneurs want to do a land grab, and it’s often the right thing to do, but you have to balance between your desire and ability to do it,” says Ben Narasin, venture partner at New Enterprise Associates Inc., which isn’t involved with Oyo.There were missteps at Oyo from the start. The Japan hotel team, led by a transplant from India named Prasun Choudhary, figured they could get to as many as 75,000 rooms in the first year, which would put them ahead of the Apa Hotels chain in the No. 1 spot. But they took as their starting point an inflated addressable market of 1.6 million rooms based on numbers from the local tourism authority: They included campgrounds, bed-and-breakfasts and pay-by-the-hour love hotels, which weren’t part of Oyo’s business plan, according to people involved at the time.Oyo Life, the apartment rentals business led by another Indian lieutenant called Kavikrut (who like many Indians goes by one name), set the goal of 1 million rooms in part because it was a stunning, round number that would exceed the capacity of the Japan market leader, the people said. That was the target that caught Son’s attention in March.To reach their goals, the two lieutenants began hiring furiously. Human resources staff conducted as many as 15 interviews a day, making offers to many the same day, people involved said. At job hunting events, prospects would get recruited on the spot, sometimes signing hand-written offer letters. Oyo Hotels surged to more than 580 people, while Oyo Life added 300, the company said.“Oyo believes that building a highly-motivated local team and strong management leadership is an important strategy for launching and succeeding in a new market,” Choudhary said in an interview. “This team is what has made it possible for us to partner with over 190 hotels.”But Oyo’s technology wasn’t ready. In the first three months after launch, the hotel operation double booked rooms because it had failed to integrate with local travel agencies, according to Oyo and former employees. Staff in India entered reservations made in Japanese manually, introducing errors. Some hotel owners found their rates reduced to just pennies by inscrutable algorithms. When they complained, the fix would take days because pricing was controlled in India, according to former employees.At the same time, Oyo Life workers struggled to keep track of keys they received from landlords because of software created in India. One tenant interviewed by Bloomberg spent the night in his car outside of his new apartment because he was given a wrong code for a lock box containing the keys. Even though it was during working hours, no one was manning the help lines at the company, he said. Two other customers interviewed by Bloomberg also had trouble getting into their apartments.“Oyo operated like they were driving a Ferrari, instead of a hatchback,” said Taito Ito, executive officer at Japan Accommodation and Lodging Foundation, a hotel industry group handling about a dozen complaints against the company from its members. “It’s difficult to see this business going anywhere in Japan.”There were some satisfied customers, including one Oyo Life user who raved about the convenience of getting an apartment via an app and raking in points by paying rent with a credit card.Despite the rocky start, Agarwal landed a starring role in July at SoftBank World, an annual event Son hosts in Tokyo. On stage in front of hundreds of the Japanese company’s suppliers and customers, Agarwal explained how Oyo is using data to beat the competition. Its algorithms can evaluate properties in under five days, compared with months for traditional hotels, he said. Artificial intelligence helps Oyo predict what kind of interior design can boost demand -- like pictures of Marilyn Monroe -- and adjust prices more than 43,000 times a minute.Beaming on stage, Son said it was only a matter of time before Oyo, the third-biggest hotel chain by room count, would surpass the established giants.“In three months, he will become the world’s biggest hotel king,” Son said at the time. “This would be a first in human history.”Unbeknownst to the crowd, Agarwal and Son were in talks about an unprecedented deal at the time. To increase his stake in Oyo, the young founder would borrow $2 billion to buy out some of his earlier investors. To reassure banks including Mizuho Financial Group Inc. to lend the money, Son personally guaranteed those loans, a highly unusual arrangement. The deal would double Oyo’s valuation to $10 billion.Just weeks later, in early August, it became clear Oyo’s hotel business in Japan was falling far short of its targets. Agarwal told Choudhary to start firing under-performing staff, according to a message reviewed by Bloomberg News. But top management didn’t realize at first that labor laws in Japan prohibit such layoffs, according to former HR staff.Oyo had begun hiring before it set up all its operations, so many employees joined under temporary contracts through an outside recruiter with a plan of making them full-time after six months. When that time came, Oyo tried to cut salaries for a number of them as much as 50%, according to former employees and copies of documents seen by Bloomberg News.Alarmed by worker complaints, SoftBank sent its own compliance staff into Oyo for a week-long internal audit, the people said. In the end, Agarwal’s management withdrew the low-ball offers and said the revisions were an administrative mistake. Oyo says it wasn’t downsizing and was only making a fair assessment of staff. Choudhary acknowledges that, at first, Oyo thought it could manage performance in Japan like it has in the rest of the world.Several former Oyo Life employees, who declined to be named because they signed confidentiality agreements, described a chaotic, disorganized work environment. The company poached executives from top-tier consulting and technology firms who excelled at inspirational talk, but had little understanding of real estate and even less patience for the industry’s slow-moving ways, the people said. One of them said the real estate industry just doesn’t run on startup time.The push for growth hurt Oyo’s relationship with suppliers too. In one instance, the company placed a 100 million yen ($910,000) furniture order with Japanese maker Takumi Otsuka, clinching the deal with a handshake. A month later, Oyo canceled even though the manufacturer had already set up a dedicated line and began production, according to staff from Oyo.Oyo denied the cancellation of any confirmed orders, but acknowledged there were lapses in communication in its early dealings with Takumi Otsuka. Oyo says the two companies now share a healthy business relationship and the furniture maker remains one of its valuable suppliers. Takumi Otsuka declined to comment.In October, with Oyo Hotels short of its original targets, the company mobilized support staff to do sales. It launched Project Yukichi, named after a famed educator whose face is on the 10,000 yen bill, with the goal of that many new rooms a month. The workers, already struggling to keep up with complaints from hotel owners, were told they are also responsible for producing 30 new sales leads a month, according to former employees and company presentations. The “OYOpreneurs,” as they were called, got a three-day training session from Bain & Co. to get them up to speed, the people said.With so much energy focused on sales, customer service suffered. One Oyo Life tenant told Bloomberg News he moved into his room to find bed sheets and covers, but no bed or mattress to put them on. After facing a prospect of sleeping on the floor for a week, he hauled over a futon from his parent’s house.Yutaro Kondo, a 25-year-old entrepreneur, paid 86,000 yen for a 21-square-meter studio about an hour by train from central Tokyo. While a premium to similar listings, the contract covered internet access, all utilities and the last month free of rent. But he didn’t have heat for weeks so he moved out in December. Shortly after, he got a bill for the month that was supposed to be free.“The simplicity they offered is attractive to a lot of young people,” Kondo said. “I feel pretty disappointed they didn’t deliver on that promise.”Hotel owners are unhappy too, especially with disputes over money. Oyo aimed to increase business for its partners by dropping rates at first and then increasing the price as occupancy went up. To help ease the pain, it guaranteed owners a minimum level of revenue provided they met certain criteria. Instead, a number of hotels found the payments fell short and the company unwilling to make up the difference.Oyo acknowledged such disputes and said that in some cases hotels failed to fulfill their contractual obligations. Still, it said it decided to pay in full to mend relations. One SoftBank executive said there were troubles between Oyo and about 40 hotels out of about 200, emphasizing many hotel owners are satisfied.“Employees are exhausted from dealing with Oyo,” said Shingo Ozaki, who manages Hamakan Hotel on the southwestern island of Kyushu, which is considering ending its relationship with the startup.Oyo said it is continuously working to improve software and it launched a call center that in the past month handled 1,700 tickets from partners and guests.Late last year, after the debacle at WeWork, Son overhauled his approach to startups. At a gathering of portfolio companies in California, he cautioned founders that they need to have a strategy for profitability and that growth couldn’t be the sole target. Agarwal was in attendance.But any changes may be too late for Oyo in Japan. In December, news leaked out that SoftBank’s Yahoo Japan sold its stake in Oyo Life, liquidating the partnership without any explanation. In Japan, the hotel room count has stalled at little over 5,000, with just over 300 new rooms added in December.Oyo disclosed this week that revenue increased more than four-fold to $951 million for the fiscal year ending in March 2019, while losses surged six-fold to $335 million.“Entrepreneurship is a game where you have to learn to crawl, then walk and only then to jog and run,” said Narasin of NEA. “Skipping steps can be dangerous.”At least some hotels are giving up, tired of the troubles they’ve had with Oyo. Shoji Sato, president of the company that runs an Oyo affiliate called Sawara Kita Hotel, said the company didn’t pay revenue guaranteed for January after reducing room prices to draw more customers. He said Oyo workers often ignore his inquiries or are slow to respond too. Oyo said there is no delay in payment because the January cycle closes in mid-February.“I believed in Oyo after the salesman showed me a brochure with details about SoftBank. SoftBank is led by Masayoshi Son, who is very famous and popular in Japan,” says Sato. “Now we want to end the relationship. I am angry, of course, of course.”(Updates with financial results in fourth from last paragraph)\--With assistance from Saritha Rai and Kurumi Mori.To contact the reporters on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net;Takahiko Hyuga in Tokyo at thyuga@bloomberg.netTo contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Peter ElstromFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • India’s Oyo Reports $335 Million Loss on Revenue of $951 Million
    Bloomberg

    India’s Oyo Reports $335 Million Loss on Revenue of $951 Million

    (Bloomberg) -- Oyo Hotels & Homes, the Indian lodging startup, reported a four-fold increase in revenue for the year ending in March 2019, a dated but detailed disclosure of results at the controversial company backed by SoftBank Group Corp.The six-year-old Oyo increased revenue to $951 million for the fiscal year 2019, from $211 million for the previous year. Losses climbed to $335 million, or 35% of revenue, from $53 million, or 25% of revenue, as the startup expanded into China and other new markets. India’s regulations require companies like Oyo to disclose their financials, but with lags that can reach about a year.Oyo, founded by 26-year-old Ritesh Agarwal, began in India as a way to reserve budget accomodations online with reliable quality. With the backing of SoftBank, the company has expanded internationally and is aiming to become the biggest hotel chain in the world by room count. Its aggressive expansion has proven controversial after another SoftBank portfolio company, WeWork, crashed after attempting to go public.In its results, Oyo focused on its progress in moving toward profitability and global expansion. For example, India accounted for roughly 63.5% of its revenue in fiscal 2019, down from 99% the year before. In addition, Oyo’s loss in India was 14% of revenue, down from 24% the year before.“We are on the path to profitability,” said Aditya Ghosh, a board member, in a media conference call after the figures were released. “We haven’t set a timeline for profitability, but revenues are growing, losses have halved and margins are looking healthy.”Masayoshi Son’s Other Big Real Estate Bet Has Some Real ProblemsIts gross margin rise to 14.7% from 10.6%, the company said. Oyo has cut back in certain markets, firing about 20% of its 12,000 people in India for example.“We have pulled out of 200 cities in India, and these accounted for less than 5% of revenues,” said Rohit Kapoor, chief executive officer for India and South Asia.The two executives were cautious about the China market, given the coronavirus that has all but put a halt to travel.“The coronavirus crisis is gripping all of China, it will impact the business in the short term. We can’t say how much,” said Ghosh. “It is too soon to say how much our business will get impacted, there are too many affected provinces and it is too sensitive a matter.”Read more: Ritesh Agarwal, the Amazingly Ambitious HotelierTo contact the reporter on this story: Saritha Rai in Bangalore at srai33@bloomberg.netTo contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Edwin ChanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Financial Times

    Oyo/SoftBank: not so fast

    Oyo is a curiously familiar concept. It has a beguiling business idea but has hit roadblocks after raising a tonne of money, some of it from SoftBank. Oyo lifted revenues more than fourfold last year while net losses ballooned sixfold, according to numbers filed on Monday.

  • Financial Times

    Oyo puts brakes on expansion as coronavirus deepens woes

    Indian hotel chain Oyo has put the brakes on its aggressive expansion plans, as the SoftBank-backed group tries to address mounting losses in a Chinese market now grappling with the coronavirus. Net losses at the group jumped to $335m in the 12 months to the end of March 2019, about sixfold higher than a year earlier, Oyo said on Monday. Three-quarters of those losses came from China and the other international markets Oyo has pushed into at breakneck speed thanks to a hefty investment from SoftBank, the Japanese group led by Masayoshi Son.

  • Bloomberg

    SoftBank Fund Draws Investors for Hedge Fund-Style Vehicle: FT

    (Bloomberg) -- The head of SoftBank Group Corp.’s $100 billion Vision Fund has billions of dollars of support for a hedge fund-style vehicle, according to the Financial Times, citing people with direct knowledge of the matter who weren’t identified.Rajeev Misra, head of the Vision Fund, has support from Abu Dhabi’s state fund Mubadala and the government of Kazakhstan, one person involved in the talks said. The two funds are considering putting up as much as $4 billion together for the vehicle, the person added, the newspaper reported.Akshay Naheta, a former hedge fund manager and one of Misra’s closest allies at SoftBank’s investments unit, would manage the new Abu Dhabi-based fund, three of the people said.Naheta drove the money-making bet on German payments company Wirecard AG last year, made through the SoftBank Strategic Investment Fund, the FT said. That fund will be used for the new trading strategy, it added.To contact the reporter on this story: Hailey Waller in New York at hwaller@bloomberg.netTo contact the editors responsible for this story: James Ludden at jludden@bloomberg.net, Linus Chua, Steve GeimannFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Barrons.com

    Wall Street Bets on a Cut in the T-Mobile/Sprint Deal Price

    Sprint closed today at a discount of $1.09, or 11%, to the value of T-Mobile’s original offer. This suggests a 5% to 7% cut in the Sprint deal price may be coming. Will SoftBank play along?