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SoftBank CEO and founder Masayoshi Son has informed executives to dial back investments at a recent meeting.
According to people that were briefed on the discussion, this comes as the conglomerate looks to raise cash while tech stocks fall and the value of its holdings take a tumble.
Due to growing interest rates and Russia’s invasion of Ukraine, SoftBank has increased its exposure to struggling tech firms.
Insiders said that the writedown at SoftBank for this quarter was around $30 billion, but a slight growth in shares could make it closer to $20 billion.
“Valuations for Chinese companies listed overseas have collapsed,” said one person close to SoftBank’s China team. “We don’t expect a turnround anytime soon.”
Another person claims that SoftBank is seeking to raise cash, as well as reviewing which assets may need to be liquidated.
Despite this growing tension, analysts agree that the firm may be able to rebound, citing the $23 billion cash the group currently has on hand.
However, SoftBank’s shares have dipped by over 40% in the past year. Additionally, a metric that compares its net debt and its holdings’ valuation has risen from under 10% in mid-2020 to 22% this year.
Earlier this month, SoftBank sought the help of Goldman Sachs to market a $1 billion block of one of its most successful investments, South Korean ecommerce firm Coupang. SoftBank sold the stake at a 40% decrease from the price during Coupang’s IPO last year.
“If you look at all the action, it’s very clear that they are in desperate need of capital,” said Amir Anvarzadeh, a strategist for Japan equity at Asymmetric Advisors.
