SoftBank funds record $27 billion in losses due to deteriorating technology investments

The news has gone from bad to worse for SoftBank.

The Japanese group said on Thursday that it lost about $27 billion in its two Vision Funds for the year that ended in March, as many of the big tech companies it invests in have struggled amid rising inflation, and concerns about Covid shutdowns in China and widely. Weak global stock markets.

This has deepened the problems for SoftBank, which this year faced a sharp departure of a key executive and a winding up of the planned $40 billion sale of ARM to the chip designer due to regulatory concerns. The value of its massive holdings in Chinese online shopping giant Alibaba also tumbled as investors remained cautious about Beijing’s crackdown on Internet companies.

SoftBank lost $13.2 billion as a whole during the fiscal year, in the latest sign of a sharp turnaround in its fortunes just one year after declaring it had made more profits in a single quarter than any Japanese company in history.

company The eccentric founder, Masayoshi Son, has made headlines for years in his eye-catching purchases as he transformed SoftBank into a holding company for tech companies that seemed on the cusp of boom. But those big bets are off. Big-name startups whose futures have been staked have been poor in recent months.

During a press conference, Mr. Son offered a rare note of caution, saying SoftBank would take a “defensive stance” in which it would be more selective in its investments, as Covid and then Russia’s invasion of Ukraine left the world “in shambles.”

SoftBank, whose Vision funds include holdings in more than 400 companies, has sought to reduce its exposure to China and slash new investment there as economists warn that tough Covid measures are likely to have a continuing impact on economic growth. Mr. Sun acknowledged that the company was relying heavily on Alibaba, but said it had already begun the process of diversifying.

“In the past two years, in fact, we’ve had a very big impact from the situation in China,” he said. “But for the future, because we have reduced dependency on China in our portfolio, we think we don’t have to worry too much about the situation in China.”

Besides SoftBank’s stake in Alibaba, many of Son’s other biggest investments have slipped this year, as investors sold shares in US tech companies, and China’s crackdown on regulation continued.

SoftBank’s investments in companies such as Chinese app Didi Global and South Korean e-commerce company Kupang strained. Both of these companies have seen their value nearly halve amid the recent market turmoil.

However, much of SoftBank’s losses are only on paper, and Mr. Son has sought to highlight the returns he expects to generate from ARM, the British chip design firm. He said the final hurdle to ARM’s initial public offering was removed when it was able to regain control of its China unit from a rogue executive who refused to step down.

However, Son cautioned that SoftBank does not have a specific deadline for ARM’s listing, noting that if markets remain weak and investor sentiment remains negative, the IPO could be delayed by three to six months.

In anticipation of a tough earnings report, SoftBank shares fell about 8 percent in Thursday’s trading. Although Mr. Son acknowledged the headwinds, he also sought to create an optimistic outlook, arguing that investments in next-generation technologies such as artificial intelligence would eventually pay off.

The drop in SoftBank shares offered a discount, he said, and he said the company has gone about 40 percent of the way by repurchasing shares worth 1 trillion yen, or $7.8 billion.

“I am confident in the future of our business,” he said.