Masayoshi Son owes $4.7bn to SoftBank following tech rout

Masayoshi Son personally owes SoftBank near $5bn due to rising losses on the Japanese conglomerate’s expertise bets, which have additionally rendered the worth of his stake within the group’s second Imaginative and prescient Fund nugatory.

The billionaire’s ballooning private liabilities, found via a Monetary Occasions evaluation of SoftBank’s latest filings, comes because the world’s greatest tech investor was hammered by plunging tech shares and valuations in personal corporations over the previous 12 months.

The 65-year-old chief government and founding father of SoftBank final week stated he would step again from working day-to-day operations at SoftBank. His fundamental focus, he stated, could be on the corporate’s British chip subsidiary Arm, after the expertise conglomerate posted quarterly funding losses of $10bn.

The widening losses in SoftBank’s numerous funding autos have additionally added billions of {dollars} to the tab that SoftBank’s founder owes the group in relation to its expertise bets. It is because SoftBank fronted Son the cash to spend money on its technology-related funds, which he’s underneath no obligation to repay for a few years.

The worth of Son’s 17.25 per cent stake in SoftBank’s $56bn second Imaginative and prescient Fund was additionally worn out fully by the top of September, having been valued at $682mn through the earlier quarter. Son’s stake within the funding car climbed as excessive as $2.8bn on the finish of 2021, when heady valuations for start-ups enabled SoftBank to promote shares in public listings of portfolio corporations corresponding to WeWork and AutoStore.

SoftBank has not but collected $2.8bn that Son owes in relation to his stake within the fund. Beforehand, SoftBank netted off the worth of his fairness from the quantity he owed the group, that means on the finish of 2021 this stood at simply $4mn.

Son additionally owes SoftBank $669mn underneath the same association on its Latin American fund, which has backed start-ups throughout the continent, though that is diminished to $252mn when his fairness worth within the fund is taken into consideration.

The full quantity the Japanese government owes his firm is now at $4.7bn, when losses within the group’s shortlived inner hedge fund SB Northstar are additionally taken into consideration, SoftBank confirmed to the FT.

Son’s rising liabilities to his personal firm have emerged as SoftBank shareholders have questioned its resolution to sharply speed up the tempo of share buybacks in latest weeks, which pushed its share value to a 12-month excessive earlier this month and left its inventory buoyant regardless of the heavy losses at its Imaginative and prescient Funds.

Son has to personally cowl a 3rd of the losses in Northstar, which earned notoriety for finishing up the “Nasdaq whale” trades in US expertise shares in 2020. The stock-trading unit’s complete funding losses grew to just about $6bn on the finish of September because the group continued to liquidate its investments.

If the inner hedge fund’s outsized by-product bets had paid off, Son would have reaped a 3rd of the beneficial properties.

Equally, if Imaginative and prescient Fund 2’s investments in personal expertise corporations had been worthwhile, the SoftBank founder stood to realize handsomely with out placing up any upfront capital. As a substitute the association has wiped billions of {dollars} off the online price of one among Japan’s richest males.

In distinction to SoftBank’s first $100bn Imaginative and prescient Fund, which secured tens of billions of {dollars} from Center Jap sovereign wealth funds, its second main expertise funding car has no outdoors backers. The one buyers are SoftBank and Son, with a slug of the corporate’s stake held as desire shares that rank forward of its founder.

The second Imaginative and prescient Fund was one among quite a few blue-chip buyers that wrote off its stake in collapsed cryptocurrency trade FTX final week, with SoftBank’s complete losses standing at round $100mn.

In each Imaginative and prescient Fund 2 and the Latin America Fund, Son has pledged each his stake within the funds and a portion of his SoftBank stake as collateral for the quantity he owes the corporate. On high of this, the billionaire founder has additionally supplied a private assure in relation to the unpaid invoice.