SUMMARY
Paytm, which is backed by SoftBank’s Vision Fund 1, contributed $407 Mn gross loss to the fund, as of June 30, 2022
Delhivery contributed $510 Mn of gross profit to Vision Fund 1, while Policybazaar contributed $384 Mn profit
SoftBank reported a net loss of $24.5 Bn in June quarter as against a profit of $5.6 Bn in the year-ago quarter
Japanese investment giant SoftBank, an active investor in Indian startups, reported the biggest loss in its history in the quarter ending June 30, 2022, underpinning the ongoing pressure on tech stocks globally.
SoftBank’s net loss in Q1 stood at 3.12 Tn Japanese yen ($24.5 Bn) as against a profit of 761.5 Bn Japanese yen ($5.6 Bn) reported in the corresponding quarter last year. The loss of its Vision Fund stood at 2.93 Tn yen ($21.7 Bn) in the June quarter.
Over the last year, startups like Paytm, Delhivery and Policybazaar from SoftBank’s India portfolio went public. While the shares of Paytm and Policybazaar are trading over 57% and 51% lower, respectively, from their listing last year, those of Delhivery are up 30.4% from their listing.
Paytm, which is backed by SoftBank’s Vision Fund 1, contributed $407 Mn gross loss to the fund, as of June 30, 2022. SoftBank has invested a total of $1.6 Bn in Paytm so far, while its current value stands at $1.19 Bn.
Meanwhile, Delhivery contributed $510 Mn of gross profit to the fund, while Policybazaar contributed $384 Mn profit to Vision Fund 1. The fund has invested $397 Mn and $199 Mn in Delhivery and Policybazaar so far, and its current value stands at $907 Mn and $583 Mn, respectively, as per SoftBank Group’s earnings release.
Other Startups In India Portfolio
SoftBank has backed startups like Blinkit, Cars24, Meesho, Lenskart, among others, in India.
In 2014, SoftBank set a target of investing $10 Bn in Indian startups over the next 10 years. However, as per recent reports, the investment conglomerate invested over $8 Bn in the country in the last five years alone and was on track to achieve its target much ahead of 2024.
SoftBank invested over $3 Bn in India in 17 deals in 2021 alone, including in Meesho, Zeta, and OfBusiness.
Meanwhile, its listed portfolio startups such as Paytm continue to be in loss. Though Paytm is witnessing a decline in its losses sequentially, its Q1 FY23 consolidated net loss rose 69% to INR 645.4 Cr compared to the corresponding quarter last year.
On the other hand, OYO, a SoftBank-backed non-listed startup, has delayed its much-awaited IPO, which was initially planned for 2022, due to the market slowdown. There were also reports suggesting a possibility of the hospitality unicorn reducing its IPO size.
SoftBank reportedly holds a 46% stake in OYO.
Global Portfolio
Among SoftBank’s international investment portfolio, Chinese ride-hailing platform DiDi Global contributed $9.37 Bn of gross loss to Vision Fund 1, followed by WeWork with $3.04 Bn gross loss.
Listed tech stocks have been routed globally due to growing inflationary pressure, tightening of monetary policies by central banks and fears of an impending recession amidst the war in Europe. SoftBank also attributed its record loss to the fall in Japanese yen.
Amid the adverse economic environment, SoftBank said that its Vision Funds have heightened the investment discipline, and are focusing on a substantial reduction in operational costs and enhancing the value of the current portfolio.
In Q1 FY22, the Funds approved investment of only $0.6 Bn as against $2.4 Bn approved in the preceding quarter. The Funds had approved investment of $20.6 Bn in the corresponding quarter of the previous year.
Softbank also announced a share buyback programme of $400 Bn yen for one year, starting August 9.
