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SoftBank cash infusions into WeWork and Uber have come at a cost, with its Vision Fund now set to bear a write-down of at least $5B following the poor performance of those companies.
SoftBank is the parent company of the $100B Vision Fund, and is set to reveal the write-down next month with its second-quarter earnings, Bloomberg reports. The hit could be as much as $7B, but the exact figure is not yet final.
Sources told the publication investment in The We Company — which SoftBank agreed this week to bail out — and Uber are the cause of the write-down. The fund, which launched in 2017 and has invested nearly $85B, according to The Wall Street Journal, is now shifting its approach to improving corporate governance at portfolio companies, rather than thre aggressive, high-risk investing for which it has become known.
Uber and WeWork were once considered the fund’s standout performers, but both are now proving major pain points. Uber’s valuation has slid dramatically since its initial public offering in May and The We Company last month canceled its IPO amid widespread skepticism about the health of the coworking giant's finances and relationship with then-CEO Adam Neumann.
“Eventually this is going to come back to haunt them,” Amir Anvarzadeh, a market strategist at Asymmetric Advisors Pte, told Bloomberg. “The market is just not in the mood to offer money-losing unicorns the kind of money SoftBank was willing to pay.”
SoftBank’s $9.5B rescue plan of The We Company values it at less than $8B, per Bloomberg, well below the lofty $47B it once held.
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