TOKYO - Japan's SoftBank Group Corp reported a record $26.2 billion loss at its Vision Fund investment arm on Thursday, as rising interest rates and political instability have whiplashed high-growth tech stocks.
The loss was in stark contrast to a year earlier when SoftBank delivered a record annual profit, and it put founder and CEO Masayoshi Son's strategy of concentrating heavily on riskier, high-growth stocks under more scrutiny.
Investors are now increasingly questioning whether many of the once high-flyers it has invested in have a clear path to profitability. South Korean e-commerce firm Coupang is trading 70% below its listing price. Ridehailers Didi Global Inc and Grab Holdings, also tumbled during the January-March quarter.
Son, at a briefing following the earnings announcement, said SoftBank needed to take a defensive position by improving its cash position through asset monetisation and stricter investment criteria.
Son said the group has been able to reduce its risk exposure in China, where a regulatory crackdown has hit tech companies. He said he believed there were still "great companies" in China, but that SoftBank wanted to invest in smaller amounts.
Son's earnings presentations are closely watched for clues into his thinking about the future of the sprawling tech conglomerate. On Thursday, he repeatedly emphasised the group's financial prudence and the prospects for chip designing company Arm, which SoftBank hopes to list in the United States.
The Vision Fund has around 450 companies in its portfolio and made 43 investments during the fourth quarter. It is slowing the pace of investment in the current quarter as private prices lag the fall in public markets.
While 20 portfolio companies raised funds at higher valuations during the quarter, SoftBank also marked down some of its unlisted assets, contributing to the record loss, in sectors such as consumer, fintech and transportation.
Son, 64, has described SoftBank as a goose laying golden eggs but the pace of listings has slowed with one notable recent exception, Indonesia's GoTo, sliding since going public last month.
The group's annual net loss was 1.7 trillion yen ($13.15 billion). The Vision Fund unit's assets, including the Latin American funds, were worth $175.6 billion at March-end. That compared to an acquisition cost of $141.6 billion.
SoftBank also recorded, in its non-consolidated earnings, a 669.5 billion yen loss due to its SB Northstar trading arm, which had placed bets on listed stocks and derivatives.
($1 = 129.2600 yen)
(Editing by David Dolan and Jacqueline Wong)