China’s crackdown on its tech industry and the uncertainties in the global market following Russia’s invasion of Ukraine have spelt disaster for Japanese billionaire investor and Softbank Group Corp Founder Masayoshi Son. The 64-year-old’s wealth has plummeted by $25 billion in the last one year. The latest Bloomberg Billionaire Index projects his fortune at $13.7 billion.
It was not long ago that Softbank was borrowing heavily on the back of its stakes in tech giants such as Alibaba Group Holding Ltd, only to pump it in promising startups, according to Bloomberg.
However, the Chinese government’s aggressive push against its own tech giants such as Alibaba; global inflation; and now the Russian war against Ukraine are again testing Son. While the global investment firm has endured and overcome multiple failures in the past, the fresh wave seems more concerning.
On March 11, the stock price of DiDi, a Chinese app-based transportation service provider, plunged by 44 percent marking, it biggest single one-day drop since it went public in the United States in June.
Softbank owns about 20 percent in the ride-hailing app and the Japanese conglomerate’s stake was reduced to $1.8 billion from $14 billion at the time of the IPO, according to CNBC. Uber, which sold its business China to DiDi in 2016, is another major stake holder in the company.
China’s crackdown on its tech giants has resulted in the value of the major companies in Softbank’s portfolio sliding downward. In the Japanese investment giant’s portfolio, the value of Alibaba Group Holding Ltd and Didi Global Inc have slid 35 percent and 64 percent, respectively for the year to date, according to a Reuters report.
British chip designer company Arm, owned by Softbank since 2016, recently planned to cut 1,000 jobs -- around 15 percent of its work force -- following the failure of its $40-billion deal with Nvidia.
Softbank acquired Arm for $32 billion in 2016. In September 2020, it announced it would sell Arm to Nvidia but the deal was scrapped in February this year, according to CNBC.
In the past year, Softbank’s stock value has gone down 60 percent and the loan-to-value ratio reached 22 percent at the end of last year, the Bloomberg report added. The loan-to-value ratio is calculated by dividing the net debt by the equity value.
