Son Owes SoftBank $5.2 Bn On Side Deals Post Losses At Vision Fund Unit

By Min Jeong Lee, Pei Yi Mak and Takahiko Hyuga

Masayoshi Son is now personally on the hook for about $5.2 billion on side deals he set up at SoftBank Group Corp. to boost his compensation, after the Vision Fund venture capital arm capped a year of record losses. 

 

The Vision Fund unit lost ¥297.5 billion ($2 billion) in the three months ended March, ending the fiscal year with a total loss of ¥4.3 trillion — its worst since Son proudly set up the business in 2017. The world’s largest technology investor reported dismal earnings despite a global rebound in equities, as it suffered losses on unlisted startups in its portfolio.

His unrealized losses widened by about $130 million from three months before, with most of the deficit linked to the Latin America fund. The founder and chief executive officer of SoftBank was down $5.1 billion on the same side deals through the December quarter. 

Son, whose stake in SoftBank grew in recent months, also owns portions of the company’s key investment vehicles. While these holdings have sparked controversy due to corporate governance concerns, the Japanese billionaire has denied any conflict of interest.

Portfolio losses ratcheted up Son’s deficit to about $2.9 billion from his Vision Fund 2 interest, and $463 million at the Latin America fund, according to disclosures for the March quarter. His remaining deficit at SB Northstar was ¥246.9 billion ($1.8 billion). The debt totaled $5.2 billion, according to Bloomberg calculations based on company disclosures.

The 65-year-old billionaire holds 17.25% of a vehicle set up under SoftBank’s Vision Fund 2 for its unlisted holdings, as well as 17.25% of a unit within the company’s Latin America fund, which also invests in startups. He has a 33% stake in SB Northstar, a vehicle set up at the company to trade stocks and derivatives.

There is no immediate deadline for repayment and the value of Son’s positions could improve in the future, and for SB Northstar, Son has already deposited some cash and other assets. The founder would pay his share of any “unfunded repayment obligations” at the end of the fund’s life, which runs 12 years with a two-year extension.

Son’s net worth stood at $8.9 billion after Thursday’s close, after adjusting for his deficit from his interests in SB Northstar, Vision Fund 2 and the Latin America fund, according to calculations by Bloomberg Billionaires Index.

SoftBank shares dropped in early Friday trading in Tokyo after the financial results. The stock fell as much as 5.5%, its biggest fall in about two months. Besides the losses, investors were on the lookout for a buyback, which did not materialize.