Japan’s SoftBank Group Corp has reported a record $26.2 billion loss at its Vision Fund investment arm.
Rising interest rates and political instability that has hit high-growth tech stocks dragged SoftBank down.
The loss contrasts to a year earlier when SoftBank delivered a record annual profit, and it put founder and CEO Masayoshi Son’s strategy of concentrating heavily on riskier, high-growth stocks under more scrutiny.
Investors are now increasingly questioning whether many of the once high-flyers it has invested in have a clear path to profitability.
Son, at a briefing following the earnings announcement, said SoftBank needed to take a defensive position by improving its cash position through asset monetisation and stricter investment criteria.
Son said the group has been able to reduce its risk exposure in China, where a regulatory crackdown has hit tech companies.
The Vision Fund has around 450 companies in its portfolio and made 43 investments during the fourth quarter. It is slowing the pace of investment in the current quarter as private prices lag the fall in public markets.
The group’s annual net loss was 1.7 trillion yen ($13.15 billion). The Vision Fund unit’s assets, including the Latin American funds, were worth $175.6 billion at March-end. That compared to an acquisition cost of $141.6 billion.
SoftBank also recorded, in its non-consolidated earnings, a 669.5 billion yen loss due to its SB Northstar trading arm, which had placed bets on listed stocks and derivatives.