|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||66.85 - 66.85|
|52 Week Range||40.00 - 152.44|
|Beta (5Y Monthly)||1.46|
|PE Ratio (TTM)||14.46|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||Mar 28, 2018|
|1y Target Est||N/A|
(Bloomberg) -- In early March, before the coronavirus pandemic triggered a global economic lockdown, SoftBank Group Corp. founder Masayoshi Son paid tribute to Rajeev Misra, the man who runs his $100 billion technology investment fund. Wearing a $70 Uniqlo down jacket, the Japanese billionaire put his arm around Misra’s shoulders at a town hall meeting in San Carlos, California. He said he would never forget the help Misra provided when he was at Deutsche Bank AG more than a decade earlier and spoke of the trust and respect they had developed since, according to a summary shared internally. “We are family,” Son said. But behind the smiles and talk of kinship, another story is unfolding, one about the perplexing relationship at the top of SoftBank. The Vision Fund this week reported a loss for the latest fiscal year of $17.7 billion as it wrote down the value of portfolio companies including WeWork and Uber Technologies Inc. That triggered the biggest loss in SoftBank’s 39-year history. Its shares have been hammered as investors fret that the virus will batter the company’s holdings even more, and Son has said he will sell $42 billion in assets.Misra is at the heart of the problem in ways that go beyond how the fund’s companies are performing, people familiar with the matter say. He has come under fire for alleged efforts to tarnish internal rivals, including a previously undisclosed clash with SoftBank Chief Operating Officer Marcelo Claure. The company has acknowledged that it’s conducting an internal review. At the same time, Elliott Management Corp., the activist investment fund that built up an almost $3 billion stake in the company, has asked SoftBank to name three independent directors and create a new board committee to improve the Vision Fund’s investment process, according to correspondence reviewed by Bloomberg News.“Misra and Masa go back a long way, but gratitude should only last so long,” said Justin Tang, head of Asian research at United First Partners in Singapore. “If Misra is not the problem, he’s at least a big part of it.”The corporate intrigue involving Claure began in 2018, when the Bolivian entrepreneur was under consideration to join the Vision Fund’s board and investment committee, according to six people with first-hand knowledge of the matter and a review of emails and documents. The fund — run by Misra as an affiliate of the Japanese company — hired a Swiss firm called Heptagone to conduct a background check on Claure’s possible ties to money laundering and drug cartels, said the people, who asked for anonymity because they feared retaliation. The report cleared him, but its focus opened a rift between the two men that kept Claure off the fund’s board and solidified Misra’s control, the people said.A Vision Fund spokesman said one of the fund’s limited partners, not Misra, requested the background check and Misra wasn’t involved in determining its focus. SoftBank has been told the same thing and doesn’t have evidence otherwise, people familiar with the matter say. But current and former executives across the SoftBank empire remain convinced that Misra played a role since the report was commissioned by his team and follows a pattern of similar accusations about undermining internal rivals. In March, days after the Wall Street Journal reported that Misra had allegedly orchestrated a campaign to sabotage two former SoftBank executives beginning in 2015, Son ducked questions about the story from investors at a meeting at the Lotte New York Palace hotel, according to two people who were present. One of them, a SoftBank shareholder, told Bloomberg News afterward that the company needs a Vision Fund leader more focused on tight operations than turf battles. Son has remained steadfast in his support. “Rajeev has been instrumental in the company’s growth and success,” Son said in a statement to Bloomberg. “He’s also been a very trusted senior executive and friend, and will continue to have my full support and confidence.” The Vision Fund spokesman denied that Misra was involved in any campaigns to undermine company executives. “The claims underpinning this story are untrue, and have been fully denied,” he said.But some SoftBank insiders are wondering how Misra has managed to survive. It may be, they said, that Son needs his financial expertise to navigate the next few months of asset sales, share buybacks and loan repayments as the coronavirus weakens portfolio companies, hurting SoftBank’s ability to borrow. Misra helped Son finance difficult deals before joining the company in 2014 and played a crucial role in raising capital for the Vision Fund. He has also established his own power base at the fund’s London headquarters, surrounded by a coterie of former Deutsche Bank colleagues.Still, there are long-term risks for Son in tolerating what many see as a divisive culture and chaotic infighting that have plagued the Vision Fund since its inception. “Misra personifies what Vision Fund is about — a bunch of dealmakers obsessed with leverage who have no business running a venture capital fund,” said Amir Anvarzadeh, a market strategist at Asymmetric Advisors in Singapore, who has been covering the company since it went public in 1994. “But it would be naïve to put all of their problems at Misra’s feet. Son has the ultimate word.” Son and Misra share a bond as outsiders who left their native lands to study abroad and ended up finding wealth and prestige. Son, 62, went to the University of California, Berkeley and launched businesses in the U.S. before founding SoftBank in Japan in 1981. Misra, 58 and born in India, earned degrees from the University of Pennsylvania and the Massachusetts Institute of Technology before embarking on a career in banking at Merrill Lynch.But while Son never worked for anyone else, Misra always operated within large organizations, navigating their power structures. He moved to Deutsche Bank in 1997, where he eventually became global head of credit trading, turning it into one of the biggest traders of credit-default swaps — instruments at the heart of the 2008 financial crisis. One of his traders, Greg Lippmann, featured in Michael Lewis’s The Big Short, bet on a crash in the U.S. housing market, even as Deutsche Bank was a leading player in creating and selling mortgage-backed securities to investors. With slicked-back hair and a thicket of woven bracelets around his wrist, Misra speaks with an intimacy that suggests he’s confiding in a listener as he races from one subject to the next with a burning urgency. He wears his eccentricities proudly: He often padded around the office in stockinged feet, incessantly smoking, vaping or chewing nicotine gum.Misra joined SoftBank after stints at UBS Group AG and Fortress Investment Group. He started as head of strategic finance, reporting directly to Son, but his connections to the boss preceded his appointment. In 2006, Deutsche Bank helped SoftBank finance the acquisition of the Japanese wireless operations of Vodafone Group Plc, one of the most consequential deals of Son’s career. The $15 billion purchase was the largest leveraged buyout ever in Asia at the time and faced skepticism because Vodafone had struggled against the country’s top wireless players. Son succeeded in turning the business into a viable competitor, in part by persuading Steve Jobs to give him exclusive rights to the iPhone in Japan, and completing SoftBank’s transformation from software distributor to telecom conglomerate.Misra proved his worth at SoftBank as well. Son had acquired the troubled No. 3 wireless operator in the U.S., Sprint Corp., but the turnaround had proven far more difficult than the one at Vodafone. Misra put together a novel loan package secured by Sprint’s wireless licenses that helped it avoid bankruptcy.From the start, Misra clashed with Nikesh Arora, a hotshot former Google executive Son recruited in 2014 to oversee SoftBank’s startup investing, according to people with direct knowledge of their relationship. Arora would openly question Misra’s judgment, even on financial issues, leaving him fuming, the people said.In early 2015, Misra set out to undermine Arora and one of his allies at SoftBank, Alok Sama, the Wall Street Journal reported in February. The newspaper said Misra worked through intermediaries to plant negative stories about the executives, concocted a shareholder campaign against them and attempted unsuccessfully to lure Arora into a sexual tryst. “These are old allegations which contain a series of falsehoods that have been consistently denied,” a spokesman for Misra told Bloomberg News, adding that Misra thinks highly of Arora and that the two men worked together productively on many deals. “Mr. Misra did not orchestrate a campaign against his former colleagues.” A spokesman for the Wall Street Journal said the paper stands by its reporting.Arora was cleared of wrongdoing by SoftBank, but he left in 2016 and is now chief executive officer of Palo Alto Networks Inc. Sama, who had been in charge of SoftBank’s investments and inked many of its early startup deals, seemed a logical candidate to play a leading role at the Vision Fund. But some of the limited partners expressed reservations about him, people familiar with the matter said. Arora didn’t respond to requests for comment, and an attorney for Sama declined to comment.Meanwhile, Misra solidified his ties to Son. He spent time in Tokyo in early 2017 as Son worked on the acquisition of Fortress. He also used his former Deutsche Bank connections to help close a deal for Saudi Arabia’s Public Investment Fund to become the Vision Fund’s cornerstone investor, chipping in $45 billion, almost half of the capital. That May, Misra was named head of the Vision Fund. The clash with Claure began after Sama was sidelined, according to SoftBank executives familiar with the matter. Son hit it off with Claure in 2013, when SoftBank took a majority stake in Brightstar, a Miami-based mobile phone distributor he founded that became one of Latin America’s fastest-growing startups. The 6-foot-6 executive quickly demonstrated how SoftBank could save millions on its purchases, winning respect from his new boss. A year later, Son tapped him to replace Sprint’s CEO. Claure made enough progress fixing the wireless operator that Son rewarded him with a seat on SoftBank’s board in 2017 and named him chief operating officer the following year. Then, Son gave Claure a new challenge: building teams in government affairs, legal services and operations to support the company’s expanding portfolio. Part of the mission was to assemble and lead a task force that would help startups fine-tune their strategies to improve execution and speed their path to profitability. The mandate would place him at the center of the action as SoftBank transformed itself into a technology investment conglomerate. It also apparently put Claure on a collision course with Misra.The first hint that this might not be a typical corporate rivalry came months before the Heptagone investigation, according to a person close to Claure. In the summer of 2018, Stephen Bye, a former Sprint executive, reached out to Claure with unsettling news. Bye, Sprint’s chief technology officer until 2015, was approached by a private investigator trying to dig up dirt on his former boss, the person said. Bye declined to talk to the investigator and immediately called Claure. Claure, 49, was used to people poking into his past because he was often approached about joining corporate boards. But he had also heard speculation about Misra’s role in the campaigns against Arora and Sama, and he expressed concern that he was next, the person said. The Vision Fund spokesman said neither Misra nor anyone else from the fund was involved in the approach to Claure’s former employee. Bye declined to comment.In October 2018, after the murder of Washington Post columnist Jamal Khashoggi at the hands of Saudi agents, Son and Misra traveled to Riyadh to meet with officials of the sovereign wealth fund, their biggest investor. They made the trip during the Saudi fund’s annual investment conference, even as other global executives canceled their travel plans. While the two men didn’t attend the conference, Son met with the head of the Public Investment Fund, Yasir Al-Rumayyan, and laid out the new role he envisioned for Claure. He would join the Vision Fund board and its investment committee, and manage the group of operations specialists when it was embedded within the fund, according to a proposal reviewed by Bloomberg News. The changes, if implemented, would give Claure broad authority at the fund.Later that year the Vision Fund commissioned the Heptagone report. What made it different from routine due diligence, according to the people directly involved, was that the sleuths were asked to answer three specific questions: Was Claure or any company under his control ever involved in money laundering, tax evasion or fraud? Was he ever in a relationship with individuals charged with or convicted of money laundering, drug trafficking or other crimes? Had he been convicted of a crime in the U.S. or elsewhere? Claure’s company, Brightstar, generated enormous amounts of cash selling used phones in Latin America in the 1990s, exactly the kind of business that could be used for money laundering, Heptagone’s report said. But the report found no evidence Brightstar or Claure were involved in such activities, people who saw it said.Heptagone went on to say that Claure had a long-standing friendship with Carlos Becerra, a San Diego businessman whose name had appeared in U.S. Drug Enforcement Agency reports for possible involvement in cocaine distribution and money laundering. After Becerra sold a unit of his company to Brightstar, in 2007, the two men remained friendly. A photo on Becerra’s Instagram account from June 2015 showed him posing on a boat dock with Claure. Becerra, who hadn’t been charged with a drug-related crime, told Bloomberg News that his relationship with Claure was cordial, not close. He denied any involvement in money laundering or drug dealing and said he has held a California liquor license since 2001, which requires a background check and isn’t available to anyone with a criminal record. The closest Claure came to a crime, the Heptagone report found, was his involvement in a Miami bar fight in the 1990s in which no one was hurt and he wasn’t charged. Heptagone co-founder and managing partner Alexis Pfefferlé said he couldn’t confirm or deny his firm’s involvement in any report but added that Heptagone “has always been able to fully complete its assignments.”The Vision Fund spokesman said the fund often runs background checks on employees, so it wasn’t abnormal to conduct one on Claure, given his potential involvement in operations. The only thing atypical, he said, was that it came at the request of a limited partner. While the Heptagone report cleared Claure, its underlying premise appeared to be that a Latin American entrepreneur must have built his business through unsavory means, according to the people who reviewed the document. Claure was furious. He went to Son, outraged at what he saw as an attempt to damage his reputation, the people said. SoftBank took over the due diligence from the Vision Fund and gave the job to Kroll, a more established security firm, the people said. Kroll, which declined to comment, found no problems in Claure’s past. But suspicious that Misra was behind the campaign, Claure told Son he wanted no formal part of the Vision Fund, the people said. Son ultimately decided to keep the two out of each other’s way. In February 2019, about 40 employees Claure had hired were shifted over to work for Misra. Claure, who had moved his wife and four youngest daughters to Tokyo less than two months earlier, headed back to Miami. He has since helped close Sprint’s merger with T-Mobile US Inc. and is leading the effort to turn around WeWork. He also oversees a Latin American investment fund for SoftBank and co-owns a Major League Soccer team, Inter Miami, with former British star David Beckham. SoftBank denied that Claure and Misra clashed over the operations group and said both men agreed that folding it into the Vision Fund was in the best interests of the business. “While we have had our occasional differences,” Claure said in a statement, “I have a close and collaborative relationship with Rajeev, including my involvement with many of the Vision Fund’s largest portfolio companies.” The relationships Misra forged at Deutsche Bank continue to underpin his power and influence. Colin Fan, a former co-head of the investment bank, moved to SoftBank in 2017, joining more than half a dozen former bankers and traders from the German lender. But arguably the most important connection forged at Deutsche Bank is Misra’s relationship with London-based merchant bank Centricus, founded by three former Misra colleagues: Michele Faissola, Dalinc Ariburnu and Nizar Al-Bassam. The firm, originally called FAB Partners for the principals’ last names, began working with SoftBank in 2016, when Misra asked it to help find financing for the Vision Fund. Centricus advised on the creation and structure of the fund, suggested employees and helped cement the investment by the Saudi sovereign wealth fund — a deal hashed out in October of that year when Mohammed bin Salman, then the country’s deputy crown prince, met with Son in Tokyo.For its work, Centricus negotiated a payment of more than $100 million, people familiar with the arrangement said. And the fees kept coming. Centricus advised SoftBank on its $3.3 billion deal for Fortress and teamed up with Son on a failed bid to start a 24-team soccer tournament with FIFA. The firm also was brought in to help raise capital for a second Vision Fund, Bloomberg reported in mid-2019.Some SoftBank and Vision Fund executives have questioned the amount paid to Centricus, the people with knowledge of the arrangement said. Although fees for helping companies raise capital are often about 1%, making the sum paid to Centricus a good deal for SoftBank, executives critical of Misra’s leadership were piqued that the recipients were former Deutsche Bank colleagues, the people said. Centricus and SoftBank both declined to comment about fees or any other aspect of their relationship.Faissola left the firm after his connections with the Qatari government created tension with the Saudis. But Centricus hired another former Deutsche Bank colleague of Misra’s as a consultant: London-based hedge fund manager Bertrand Des Pallieres, a senior trader at the bank from 2005 to 2007 who reported directly to Misra. Des Pallieres was under consideration for a job at the Vision Fund in 2018, the people said, but that all changed after the Wall Street Journal reported that Misra had recruited Italian businessman Alessandro Benedetti to undermine Arora and Sama. Benedetti, who denied through a spokesman that he had anything to do with those efforts, was a business associate of Des Pallieres. A year later, Des Pallieres became a Centricus consultant.SoftBank’s relationship with Centricus began fraying last year, according to people familiar with the matter. Misra argued that SoftBank had no further need for the firm, as Son had developed ties of his own with MBS, the people said. And Misra had his own relationship with Al-Rumayyan, the Saudi sovereign wealth fund head. In October 2019, Misra and Son attended a party for Al-Rumayyan and MBS on a yacht in the Red Sea, people with knowledge of the event said, confirming a Wall Street Journal account.By then, SoftBank had hired Goldman Sachs Group Inc. and Cantor Fitzgerald LP to help search for new investors. Some SoftBank executives were surprised by Cantor’s involvement, as the New York-based bank had little experience sourcing investments for initiatives like the Vision Fund. But Cantor’s president since 2017 has been former Deutsche Bank co-CEO Anshu Jain, a onetime boss and childhood friend of Misra’s.The Saudis have held off committing capital to a second Vision Fund, and Son this week said he had to stop raising money because of difficulties with WeWork and other investments. SoftBank stepped in to save WeWork last year after its failed initial public offering and put Claure in charge of turning the business around. But the coronavirus pandemic has exacerbated the challenges of drawing people to co-working spaces.“Vision Fund’s results are not something to be proud of,” Son said at somber press conference in Tokyo on Monday, with reporters and analysts calling in remotely because of the pandemic. “If the results are bad, you can’t raise money from investors.”Elliott, the fund run by billionaire Paul Singer, has pressed for changes, and Misra has been involved in those talks, according to people with knowledge of the discussions. He has met frequently with Singer’s son Gordon, the people said. But two people familiar with Elliott’s operations say the firm has asked SoftBank to get to the bottom of Misra’s alleged involvement in campaigns against his colleagues and has expressed dismay at the infighting among top managers and how much of that spills into the press. A spokeswoman for Elliott denies that the company is pushing for an investigation, and a SoftBank spokesman said Son hasn’t received such a request.SoftBank’s board probed who was behind the campaigns against Arora and Sama but didn’t uncover any definitive evidence, people with knowledge of the matter said. While the company has said it’s looking into the most recent Wall Street Journal allegations, several senior executives have downplayed their significance. Ron Fisher, a SoftBank director, called the February story “another example of people anonymously spreading misinformation and innuendo about our executives,” according to an email to Vision Fund managing partners.SoftBank's board has lost several of its most independent voices in recent years, the kind of directors who could question his decisions. Shigenobu Nagamori, the outspoken founder of motor maker Nidec Corp., stepped down in 2017. Fast Retailing Co. CEO Tadashi Yanai, who had been on the board since 2001 and was a rare voice of dissent, left at the end of 2019. On the same day SoftBank announced its record losses this week, Alibaba co-founder Jack Ma announced he would leave the board too, after 13 years. Two new independent directors were nominated — Cadence Design Systems Inc. CEO Lip-Bu Tan and Waseda University professor Yuko Kawamoto.Misra’s fate is ultimately intertwined with the Vision Fund, which Son once declared would be the foundation of a new SoftBank but now risks becoming one of his worst missteps. The fund declared quarter after quarter of profit after its inception in 2017, as it marked up the value of startups and booked paper profits. But since the WeWork fiasco, it has lost all of that money and more. The structure of the fund — Misra’s invention — will create another squeeze. About $40 billion of the money raised from outside investors is in the form of preferred shares that pay about 7% a year. The idea is that SoftBank would see extra profits if the Vision Fund hit it big, but it also means losses are amplified. Venture capital funds typically don’t have such liabilities to avoid the risks of such a volatile business. Misra has been on something of a publicity tour recently to defend his reputation, although he declined to comment for this story. In an interview with CNBC published in March, he said that the Vision Fund’s mistakes are surfacing early and its portfolio will be redeemed in 18 to 24 months. “I’m so, so positive I’ll prove people wrong,” he said. He also vowed he wouldn’t leave the fund. “I owe it to my stakeholders, my LPs, my employees to be here for the journey,” he said. The Vision Fund spokesman denied Misra said the portfolio would recover that quickly. In the end, what SoftBank decides to do about Misra, if anything, depends on Son. His business is under intense pressure, putting even his deepest loyalties to the test. “At a company like SoftBank, where the founder runs the business, that person has to take responsibility for the ethics and the standards for behavior within the company,” said Parissa Haghirian, a professor of international management at Sophia University in Tokyo who specializes in Japanese corporate culture. “If you are not clear about this, then everybody sets their own rules.” For 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.
(Bloomberg) -- Before the meltdown at WeWork and the outbreak of the coronavirus pandemic, Masayoshi Son said he would like to raise a new Vision Fund every two to three years after his initial $100 billion fund. Now the first Vision Fund looks like it could be the last.SoftBank Group Corp. said Monday the Vision Fund lost $17.7 billion in the most recent fiscal year, triggering the worst loss ever in the Japanese company’s 39-year history. SoftBank had to write down the valuations of companies like WeWork and Uber Technologies Inc. because of business missteps and the coronavirus fallout. Its return on the fund is negative 6%, compared with 62% just a year ago, he said.Son conceded he is unlikely to be able to draw outside investors for another Vision Fund, an initiative that he once proclaimed the future of SoftBank as it moved away from the telecom business. The Tokyo-based company will keep making startup investments with its own money, albeit more cautiously than in the past. About 15 of the fund’s startups will likely go bankrupt, he said, while another 15 are likely to thrive.“Vision Fund’s results are not something to be proud of,” Son said at an unusual press conference in Tokyo, with reporters and analysts calling in remotely because of the pandemic. “If the results are bad, you can’t raise money from investors. Things aren’t good, that’s why we are investing with our own money.”Son also announced Jack Ma, co-founder of Alibaba Group Holding Ltd., will leave the SoftBank board after 13 years and that his company may not pay a dividend this year to preserve cash.The 62-year-old billionaire, dressed formally for the occasion in a dark suit, white-striped shirt and blue tie, was far more somber than in the previous earnings conference. In March, he declared the tide was turning for SoftBank after the setbacks at WeWork.On Monday, Son conceded he had not anticipated how the global economy would be affected by the fallout from Covid-19.“At that time many people could not see that the coronavirus pandemic would spread that far,” he said. His presentation was full of dark slides that highlighted comparisons between now and the Great Depression, when it took years for economic activity to recover. SoftBank wrote WeWork’s valuation down again, this time to $2.9 billion or more than 90% less than its peak.Son is racing to put his house in order to withstand the challenges. On Monday, SoftBank also detailed plans to shore up its balance sheet and its stock price, part of a plan to sell 4.5 trillion yen in assets.The company raised $11.5 billion from contracts to sell shares in Alibaba, its most valuable holding. SoftBank is likely to sell stock in its Japanese telecom unit SoftBank Corp. and T-Mobile US Inc. SoftBank Group plans to seek buyers for shares of T-Mobile US worth about $20 billion, Dow Jones reported.The Japanese company also said on Monday it plans to spend up to 500 billion yen to buy back shares through next March, on top of an existing repurchase plan of the same size. That has helped SoftBank shares stabilize, rising more than 75% from their low in March. The stock climbed 2.2% in Tokyo on Tuesday, as Japan’s indexes rose.”SoftBank Group’s massive buyback remains the most important source of good news and tailwind for” the shares, Atul Goyal, senior analyst at Jefferies Group, wrote in a report.SoftBank did not give a dividend forecast for the first in its history, saying it may not pay one this year. “Just in case we need more financing,” Son says.Separately, SoftBank said Ma will step down as a director as part of several planned board changes. Three new directors have been nominated, including SoftBank Chief Financial Officer Yoshimitsu Goto. Lip-Bu Tan and Yuko Kawamoto will join, bringing the total of external board members to four. Kawamoto will be the first female director.Son’s increasingly risky bets over the past few years coincided with departures from SoftBank’s board of some of it smost outspoken members. Shigenobu Nagamori, the founder of motor maker Nidec Corp., stepped down in 2017, while Fast Retailing Co. Chief Executive Officer Tadashi Yanai left last December.“With no famous outside directors left on SoftBank’s board, it’s not clear who is going to hold Son responsible anymore,” said Masahiko Ishino, an analyst at Tokai Tokyo Research Center.Son did not back away from continuing to make startup investments, although it will be with his own money for the foreseeable future. He said he believes that the economic shock of the coronavirus could end up helping technology companies in fields from ride-hailing to artificial intelligence.“I believe this shock will only accelerate the paradigm shift,” he said.Son famously lost about $70 billion during the dot-com bust, as startups cratered and his stock price crashed. He said the current downturn is nothing compared to that, when he was holding on by two fingers. Now, he has a more stable balance sheet and billions in assets he could sell if need be.“Compared to the past crisis, this time I am just looking down on the bottom of the valley from above,” he said.Indeed, he encouraged investors to think through the implications of the Vision Fund’s end. Even if the fund is worth zero, SoftBank has stakes in Alibaba, SoftBank Corp., T-Mobile US and others that are worth about double its market value.“Even in the worst case scenario, the risks Son has taken will not sink his company,” said Jusuke Ikegami, a professor at Waseda Business School in Tokyo.He offered no assurances that his startups will recover. In fact, he reckons Vision Fund company valuations are more likely to go down than up.Still, Son didn’t concede that the Vision Fund is a bust. He said SoftBank anticipates it will be able to pay a 7% return to limited partners who hold about $40 billion in preferred stock.Pressed for some view of the future, Son said that he still thinks he could see a 20% internal rate of return on Vision Fund investments. Now is the worst possible time but in five or ten years, things may look different. He could even approach outside investors about future funds.“The situation is exceedingly difficult,” Son said. “Our unicorns have fallen into this sudden coronavirus ravine. But some of them will use this crisis to grow wings.”(Updates with share price in 11th paragraph)For 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.
(Bloomberg) -- SoftBank Group Corp. said its Vision Fund business lost 1.9 trillion yen ($17.7 billion) last fiscal year after writing down the value of investments, including WeWork and Uber Technologies Inc.The company posted an overall operating loss of 1.36 trillion yen in the 12 months ended March and a net loss of 961.6 billion yen, according to a statement on Monday. The Tokyo-based conglomerate released figures in two preliminary earnings statements last month. The losses are the worst ever in the company’s 39-year history.SoftBank founder Masayoshi Son’s $100 billion Vision Fund went from the group’s main contributor to profit a year ago to its biggest drag on earnings. Uber’s disappointing public debut last May was followed by the implosion of WeWork in September and its subsequent rescue by SoftBank. Now Son is struggling with the impact of the coronavirus on the portfolio of startups weighted heavily toward the sharing economy.“The situation is exceedingly difficult,” Son said at a briefing discussing the results on Monday. “Our unicorns have fallen into this sudden coronavirus ravine. But some of them will use this crisis to grow wings.”The drop in Uber’s share price was responsible for about $5.2 billion of Vision Fund’s losses in the period, while WeWork contributed $4.6 billion and another $7.5 billion came from the rest of the portfolio, SoftBank said. The $75 billion the Vision Fund has spent to invest in 88 companies as of March 31 is now worth $69.6 billion.SoftBank also recorded losses from its own investments, including WeWork and satellite operator OneWeb, which filed for bankruptcy in March.Last year, after WeWork’s effort to go public fell apart, SoftBank stepped in to organize a bailout and put its own chief operating officer, Marcelo Claure, in charge of turning around the business. But the pandemic has hammered its operations as workers shy away from gathering in shared office spaces.WeWork’s valuation is now $2.9 billion, down more than 90% from its peak. SoftBank has invested more than $10 billion in the company.Son’s investments in hotel-booking service Oyo Hotels & Homes and Uber, among the biggest in his portfolio, have also fared poorly. Oyo, in which SoftBank invested about $1.5 billion, last month furloughed employees in countries outside its home market of India as it struggles to survive the virus. Uber’s shares are trading about 28% below its IPO price.As the concerns about investments mounted, Son responded with two share buybacks in rapid succession. The first 500 billion yen repurchase announced in mid-March initially failed to lift SoftBank’s stock. When the shares plunged more than 30% in the week that followed, Son unveiled a 2 trillion yen follow-up.SoftBank has already used roughly half of the first allotment. The company said on Friday that it had bought 250.6 billion yen of its own stock since March 13 under the original re-purchase plan.Before the earnings were announced on Monday, the company said it plans to spend up to 500 billion yen more to buy back shares through next March. The announcement is part of a broader plan to sell assets to raise as much as 4.5 trillion yen over the coming year to buy shares and slash debt. SoftBank is likely to raise the funds by selling its stakes in Alibaba Group Holding Ltd., Japanese telecom unit SoftBank Corp. and the company that results from the merger of Sprint Corp. and T-Mobile US Inc.SoftBank said on Monday that it entered into several prepaid forward contracts with banks in April and May using Alibaba shares to procure a total of $11.5 billion. That includes a $1.5 billion forward contract with settlement in April 2024, a $1.5 billion floor contract with settlement in Dec. 2023 and Jan. 2024, and a $8.5 billion collar contract with settlement from Jan. to Sept. 2022.Separately, SoftBank said that Jack Ma, co-founder of Alibaba, will step down after 13 years as a director, part of several board changes subject to approval at the general shareholder meeting in June. Three new directors have been nominated. In addition to SoftBank Chief Financial Officer Yoshimitsu Goto, Lip-Bu Tan and Yuko Kawamoto will join, bringing the total of external board members to four. Kawamoto will be the first female director.Son’s increasingly risky bets over the past few years coincided with departures from SoftBank’s board of some of it most outspoken members. Shigenobu Nagamori, the founder of motor maker Nidec Corp., stepped down in 2017, while Fast Retailing Co. Chief Executive Officer Tadashi Yanai left last December. When Paul Singer’s Elliott Management Corp. disclosed in February that is has built a stake of close to $3 billion in SoftBank, one of its requests was to increase the number of independent directors.“Activist investors might choose to stay in the background for now, given all the sensitivity around the Covid-19 impact. So these new independent director appointments and the buybacks are clearly a small win for Elliott,” said Justin Tang, head of Asian research at United First Partners. “But once the Covid-19 fallout is behind us, I am certain they can and will push for more change.”(Updates with Son quote in fourth paragraph)For 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.
(Bloomberg) -- SoftBank Group Corp. doubled the amount it plans to spend buying back shares and announced changes to its board, including the resignation of long-time director Jack Ma.The company plans to repurchase as much as 500 billion yen ($4.7 billion) worth of its own stock by March 2021, it said in a statement. That’s on top of an equally sized repurchase it had announced in mid-March.The Tokyo-based company also announced several changes to its board, including the departure of Ma, the co-founder of Alibaba Group Holding Ltd. Three new directors have been nominated, including Chief Financial Officer Yoshimitsu Goto. SoftBank shares rose as much as 3%.SoftBank, led by founder Masayoshi Son, is buying back shares to bolster its stock price after its portfolio of startup investments lost value. The company expects to book a record 1.35 trillion yen operating loss for the year ended March 31 when it reports financial results Monday afternoon in Tokyo. After aggressively investing in startups in recent years, SoftBank is marking down the value of stakes in companies such as WeWork, Oyo Hotels and Uber Technologies Inc.“The buyback announcement is a surprise, given the slew of low expectations and bad news,” said Justin Tang, head of Asian research at United First Partners.SoftBank plans to fund the buybacks in part through the sale of stakes in Alibaba and T-Mobile US Inc., Bloomberg News has reported. SoftBank is now in talks to sell a “significant portion” of T-Mobile US to controlling shareholder Deutsche Telekom AG, Dow Jones reported.The company said on Friday that it had bought 250.6 billion yen of its own stock since March 13 under the original re-purchase plan, about half of the 500 billion yen budget.Read more: SoftBank’s $23 Billion Buyback Helps Investors Ignore Profit HitThat first buyback, announced in mid-March, initially failed to lift SoftBank’s stock amid concerns the conglomerate’s portfolio of startups is vulnerable to the economic shock from the coronavirus pandemic. When the shares plunged more than 30% in the week that followed, Son took an unprecedented step to unveil a broader plan to repurchase as much as 2 trillion yen, without detailing the timing. The latest announcement is part of that broader plan.“Son is also sending a message that he is serious about funding that 2 trillion yen buyback he announced in March,” Tang said.The stock gained almost 70% since SoftBank said it plans to sell assets to raise as much as 4.5 trillion yen over the coming year to buy shares and slash debt.Read more: SoftBank Heads for Record Loss After $80 Billion Startup SpreeThe company’s Vision Fund business, focused on technology investments that contributed more than half of its reported profit a year ago, has swung to a projected 1.8 trillion yen loss. The company’s overall net loss will likely reach 900 billion yen.Son’s increasingly risky bets over the past few years coincided with departures from SoftBank’s board of some of it most outspoken members. Shigenobu Nagamori, the founder of motor maker Nidec Corp., stepped down in 2017, while Fast Retailing Co. Chief Executive Officer Tadashi Yanai left last December. When Paul Singer’s Elliott Management Corp. disclosed in February that is has built a stake of close to $3 billion in SoftBank, one of its requests was to increase the number of independent directors.Ma’s departure is a historic moment since he and Son have sat on each other’s boards for years. Alibaba is regarded as Son’s most successful investment. In addition to Goto, a long-time SoftBank veteran, Lip-Bu Tan and Yuko Kawamoto will join, bringing the total of external board members to four.Tan is a founder and chairman of Walden International, a venture capital firm based in San Francisco, and CEO of Cadence Design Systems Inc. He holds a master’s degree in nuclear engineering from the Massachusetts Institute of Technology and received an MBA from the University of San Francisco.Kawamoto is a professor at Waseda University whose subjects include corporate governance. She holds a bachelor’s degree in social psychology from the University of Tokyo, a master’s degree in development economics from Oxford University and spent years working at McKinsey & Co. Kawamoto will be SoftBank’s sole female board member.(Updates with details of asset sales in sixth paragraph)For 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 Nidec Corp plans to more than treble its revenue over the next five years by focusing on electric vehicle powertrains and buying specialists in motor technologies, two people familiar with the matter told Reuters. The world's leading maker of precision motors which supplies parts for Apple's iPhones is expected to detail its plans as soon as Tuesday when it will name former Nissan Motor executive Jun Seki as president, the sources said. The new strategy shows how the Kyoto-based company wants to play a bigger role in the auto industry as electric vehicle (EV) production takes off, after slowdowns in demand for motors in markets such as cellphones have weighed on its sales.
The executive tasked with leading a recovery at Nissan said he had decided to resign just weeks into his new job, a move that could disrupt the automaker's push to turn the corner on scandal and slumping sales. Jun Seki, Nissan's vice chief operating officer and a former contender for chief executive, told Reuters he was leaving to become the president of Nidec, a Kyoto-based manufacturer of automotive components and precision motors.
The executive tasked with leading a recovery at Nissan Motor Co Ltd said he had decided to resign just weeks into his new job, a move that could disrupt the automaker's push to turn the corner on scandal and slumping sales. Jun Seki, Nissan's vice chief operating officer and a former contender for chief executive, told Reuters he was leaving to become the president of Nidec Corp, a Kyoto-based manufacturer of automotive components and precision motors.