SoftBank warns of steeper losses as it takes hit on WeWork
SoftBank has warned of further losses on investments outside its Vision Fund, piling pressure on founder Masayoshi Son’s bet on the struggling WeWork.
The Japanese company widened its forecast for a net loss in the year ended in March from 750bn to 900m yen (£6.7bn).
SoftBank said it expects to lose 700bn yen on a portion of its investment in the embattled coworking provider WeWork that it holds outside of its Vision Fund.
In a statement the firm said: “The expected amount of such loss has increased compared to the previous forecasts as SoftBank expects to recognise new losses arising from the fair value measurement of the loan commitment and financial guarantee contract in favour of WeWork.”
It comes just two weeks after the bank warned of a $16.7bn (£13.3bn) loss on tech startups it has invested in through its Vision Fund this year. The company today said that forecast remains unchanged.
SoftBank founder and chief executive Masayoshi Son has been forced to go on the defence after some of his bets crashed in value.
Two of SoftBank’s biggest investments – Uber and WeWork – have both been hit hard by the social distancing measures sparked by the coronavirus crisis. In March, Son announced a surprise sale of $41bn of assets to slash the company’s huge debt pile.
He still plans to move forward with a second Vision Fund, but said in February, “I think that our next fund size should be a little bit smaller”.
SoftBank’s Tokyo-listed shares rose 0.5 per cent despite the guidance cut.