China’s richest man, Jack Ma, steps out of Softbank’s board as the company announces a $ 18 billion loss
Billionaire Jack Ma stepped down from the board of Japan’s SoftBank when the conglomerate reported a $ 18 billion loss to its giant Vision Fund.
The company was a record loss for the company led by Masayoshi Son, which also highlights the escalating crisis in its portfolio companies due to the global economic downturn caused by the corona virus outbreak.
Losses, including $ 10 billion in investments in WeWork, an office sharing office, and the Uber Technologies app for rides, made SoftBank the largest annual loss.
Billionaire Jack Ma stepped down from the board of Japan’s SoftBank when the conglomerate reported a $ 18 billion loss to its giant Vision Fund
SoftBank, led by CEO Masayoshi Son (pictured), lost a record $ 18 billion, underscoring the mounting crisis among portfolio companies
Ma, who has served on SoftBank’s board for 13 years, officially leaves June 25. No official reason was given for his dismissal.
The billionaire also stepped down as chairman of Alibaba, the Chinese technology giant he founded in September last year, reports Business insider.
Pressured by US hedge fund Elliott Management to repurchase shares and strengthen the board, Son said SoftBank would raise 1.25 trillion yen, or $ 11.6 billion, against its stake in Alibaba.
“The corona virus is an unprecedented crisis,” a particularly gloomy son told a earnings presentation, which compared it to the Great Depression. Looking much more subdued than usual, Son said some of his tech unicorns had fallen “into the valley of the corona virus.”
“I believe some of them will fly over the valley,” he added, standing next to a slide depicting cartoon unicorns falling into a hole as a lone winged unicorn escaped to the other side.
The crisis has put pressure on the Vision Fund portfolio, with an investment of $ 75 billion in 88 startups worth $ 69.6 billion at the end of March.
The $ 100 billion fund had already suffered two consecutive quarters before it was shaken by the coronavirus pandemic.
Losses at SoftBank include $ 10 billion in investments in WeWork, an office-sharing company founded by now-defunct leader Adam Neumann (pictured)
Record losses at SoftBanks also include investments in WeWork, an office-sharing company, and the Uber Technologies app for rides (photo)
SoftBank posted a $ 7.5 billion loss on other technology investments, which was mainly attributed to the economic shock caused by the corona virus. The outbreak has exacerbated the underlying issues in many of his bets on unproven startups.
COVID-19 has been confirmed in nearly 4.6 million people around the world and has been blamed for more than 310,000 deaths.
In the US, there are 1,519,401 confirmed cases of the coronavirus, which is blamed for more than 90,000 deaths.
SoftBank looses ties with Alibaba, the largest asset in its portfolio, of which the board also loses Ma.
SoftBank provided little detail on which companies saw write-offs, but offered a sectoral breakdown showing that construction and real estate investments were worth less than half the cost, with flagship investments in transport also underwater.
The company has used its investments to provide further funding for other bets – a strategy that will come under pressure as valuations fall – with losses greater than last month’s revised estimate.
Ousted WeWork CEO Adam Nuemann took SoftBank to court last month over running a $ 3 billion bailout for the troubled startup he co-founded.
SoftWank-backed satellite operator OneWeb filed for bankruptcy in late March, contributing to an impairment loss for investments outside the Vision Fund, which also included part of the stake in WeWork.
Ousted WeWork CEO Adam Nuemann sued SoftBank last month over running a $ 3 billion bailout for the troubled startup he co-founded.
The takeover bid was part of a $ 9.6 billion bailout package that SoftBank agreed with WeWork in October and gave it control of the company.
Since then, WeWork’s occupancy has plummeted during the COVID-19 pandemic.
In April, SoftBank said it would not go through with the offer due to a number of conditions not being met, further plunging the struggling office space company.