Softbank becomes the biggest victim of crackdown on Chinese internet giants

Softbank Group, a Japanese venture capital firm, announced its second quarter (April-September) results on November 8. Same time last year. Chinese media calls it the biggest “victim” of the collapse of the Chinese Internet giant.

At SoftBank’s Second Quarter Performance Network Conference on November 8, founder and chairman Masayoshi Son briefly reviewed the group’s impressive results over the past few quarters before announcing investment losses. bottom.

After that, he showed a video of a relentless winter snowstorm. This symbolizes SoftBank’s plunging second-quarter results.

SoftBank’s net asset value fell from $ 244 billion on June 30 to $ 187 billion on September 30. Among them, Alibaba Group’s share of net asset value decreased from 59% on September 30, 2020 to 28% in one year. At that stock price. SoftBank Vision Fund currently holds the largest share of net asset value, up from 16% a year ago to 44%.

Regarding SoftBank’s Chinese assets, it pointed out that Alibaba Group’s stock price has plummeted, and the market value of Didi Chaxing Technology has fallen in the past three months, resulting in a decline in China’s asset ratio. Net asset value is 36% as of September 30th. SoftBank’s investment in South Korean e-commerce company Coupang (NYSE: CPNG), whose stock price plummeted, also contributed to the huge loss.

For the Vision Fund, China’s asset value has fallen from $ 13.43 billion to $ 1.2 billion in the last three months. The fund currently invests 19% in China, 35% in the United States, and 46% in other countries.

Both Alibaba and Didi plunged in market value as Beijing authorities cracked down on Internet technology giants. In addition, the downturn in China’s education sector and real estate market is directly linked to Beijing’s policy shift. However, in a question-and-answer session, his son said he would continue to invest in China.

Softbank has suffered huge losses in the Chinese market in the last three months, but the risks are still manageable, Son said. Regional and industry factors are considered in the investment to reduce risk as much as possible. Japanese companies are usually small and it is difficult to find a suitable unicorn to invest in. Softbank has already invested in one and will continue to look for other companies.

The Vision Fund has invested in 368 companies. According to the website, in addition to DIDI Chuxing (NYSE: DIDI) and DIDI Autonomous, Son’s chosen Chinese unicorn companies include ByteDance, Manbang Group (NYSE: YMM), Xueshubang, Zhangmen Education (NYSE: ZME), Includes Ding Dong Maicai, KE. Holdings (NYSE: BEKE), ZhongAn Insurance (06060.HK), and Jingdong Logistics (02618.HK).

According to Sina Finance, KE Holdings’ newly released financial report shows a net loss of approximately $ 274 million between July and September. Some real estate developers are facing liquidity constraints due to tighter funding requirements in China’s real estate sector. China’s real estate market is slowly chilling, and of course KE Holdings is being hit.

The report also shows that the net income of pre-owned home trading services from July to September was about $ 900 million, compared to about $ 1.4 billion in the year-ago quarter.

At the settlement meeting, his son also announced plans to buy back $ 8.8 billion of the company’s shares between November 9, 2021 and November 8, 2022. Softbank shares are now less valuable than their actual net worth, and his son plans to increase shareholders. I will return it through a buyback.

China’s Internet giant was hit hard, but the biggest “victim” turned out to be Japan’s SoftBank Group, Chinese media reported. However, Softbank’s investment in Alibaba in 2008 of more than $ 20 million was reported to have increased to $ 55 billion by the time Alibaba was released in 2014. Between 2016 and 2020, the group reduced several holdings to cash more than $ 28 billion.

His son, who is currently losing a lot of money, still insists on investing in the Chinese market. He may be looking for a second Alibaba. On November 10, China’s Gaussian Robotics announced the completion of its $ 1.2 billion third round of funding, with the Vision Fund as one of its major investors.

Kathleen Lee


Kathleen Lee has been contributing to The Epoch Times since 2009, focusing on topics related to China. She is an engineer and chartered in Australian Civil and Structural Engineering.