SoftBank’s more cautious promise doesn’t come to Latin America

13.05.2022 11:59 GRT
UPDATED 12:32 BRT

Japan SoftBank Group Corp. reported a record loss of $ 26.2 billion Vision Foundation The investment arm on Thursday as rising interest rates and political instability led to a rapid rise in technology stocks. The loss was in stark contrast to the year before SoftBank delivered record annual profits by putting in a founder and CEO Masayashi sonThe strategy’s concentration is largely on riskier stocks with high growth under closer scrutiny. Despite the son message about “preparing for the worst”, Latin America turned out to be an “oasis” in terms of investment valuation. As most of the declared volume ($ 6.9 billion out of $ 8 billion) has already been invested in the region, there are no signs of a slowdown in the balances of the second fund.

All over the world, investors are increasingly questioning whether many of the former pilots SoftBank invested in have a clear path to profitability. South Korean e-commerce company Kupang traded 70% below its quotation price, and ride-gailers Didi and Capture also declined during the January-March quarter.

“When the world is a mess, SoftBank should play defense, ”Son said at a low-key briefing after the earnings announcement, promising to strengthen the group’s monetary position by monetizing assets and tightening investment criteria. On Thursday, he repeatedly stressed the financial prudence of the group and the prospects of the chip designer Handwhich SoftBank hopes to make a list in the United States.

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SoftBank The dream said it is investing twice or even a quarter more than last year, as part of a commitment to maintain the loan-to-value ratio of the group, which at the end of March was 20.4% and below 25%.

The Vision Fund portfolio includes 475 companies and 43 investments in the fourth quarter. This is slowing the pace of investment as private prices lag behind falling in public markets. While 20 portfolio companies raised funds for higher valuation during the quarter, SoftBank has also reduced some of its unlisted assets in sectors such as consumer, financial technology and transport, which has contributed to record losses.

New, more cautious than ever, SoftBank? Not much in Latin America

In March, the Vision Fund’s assets, including Latin American funds, totaled $ 175.6 billion. That’s compared to a $ 141.6 billion acquisition cost. However, specific LatAm figures show much better performance than others SoftBank investing in startups and technology companies.

Last September, SoftBank announced to allocate an additional fund of $ 3 billion indicated SoftBank Latin America Fund II to invest in LatAm. Leading venture capital investor in the region – with 30 Series A and higher deals in 2021 alone and more than 32 deals unicorns in his portfolio since his arrival – has already spent more than half of his second fund on LatAm startups. In the first semester of 2022 alone, about $ 250 million was invested in the region.

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Edouard Vieira, SoftBanka leading partner in marketing and communication for Latin Americatold LABORATORY that the remaining $ 1.1 billion should go at the same (accelerated) pace. “Our steadfast and long-term commitments continue. Of course, the situation in the world is chaotic. However, when comparing the results Latin America with SoftBank‘s other global investments, we will see that the region is an oasis [in terms of the market value of investees]. The problems here are structural, deep, they need startups and brilliant entrepreneurs, and now we have enough capital for the region. “

SoftBank‘s Latin America In the fiscal year, the funds invested $ 4.3 billion ($ 6.9 billion since its inception) with 65 new deals. They currently hold a total of 101 investments in the region (including seven listed companies), with a fair value of $ 9.4 billion.

(Co-authored with Reuters)