The $98.6 billion vehicle posted a ¥1.87 trillion ($17.4 billion; €16.1 billion) unrealised loss for the fiscal year ending 31 March, driven by declines of $5.2 billion and $4.6 billion in its Uber and WeWork holdings respectively, according to an earnings statement on Monday.
Of its 88 portfolio companies, 50 posted an aggregate $20.7 billion decline in fair value over the period, outweighing $3.4 billion of growth across 19 companies. A large proportion of its losses came between January and March as coronavirus battered global markets.
“SoftBank Vision Fund 2 [will be] using our own money and we’ve been continuously making investments, because the performance [of] Vision Fund 1 is not that great,” chief executive Masayoshi Son said via a translator on a call accompanying the earnings presentation.
“Therefore we’ve decided not to do the marketing for Vision Fund 2 for the partners for a while […] If the performance is not very good, then of course the money for Vision Fund 2 cannot […] be asked [from] other people.”
Vision Fund delivered a negative 6 percent net internal rate of return as of 31 March. Around 40 percent of its committed capital is preferred equity with a fixed 7 percent distribution to LPs, while the remainder is performance-based, per an earnings presentation.
The vehicle has more than ¥1 trillion of remaining capital earmarked for preferred equity distributions and additional investments, Son noted. It deployed $15.6 billion during the 12-month period, including follow-on investments.
“The stagnation in economic activity, restrictions on social outings, and stock market disruptions in various countries due to the outbreak of covid-19, have had, and are expected to continue to have, a significant impact on the business activities and fair value measurement of the portfolio companies of SoftBank Vision Fund,” the earnings report noted.
SoftBank Investment Advisers, the unit which manages the Vision Fund, has been working closely with portfolio companies to help them prepare for a further deterioration in business conditions, the report noted.
Private equity portfolios have taken a beating this year due to the combined impact of covid-19 and a rout in oil prices. Blackstone’s corporate private equity portfolio declined 21.6 percent in Q1, versus 8 percent and 12 percent for Carlyle Group and KKR respectively. London’s Apax Partners wrote down $1.4 billion – a negative 11.5 percent difference – from its ninth flagship in Q1.