SoftBank On A Defense Mode; Scaling Down On Investments

SoftBank On A Defense Mode; Scaling Down On Investments
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Softbank, one of the few investment giants in Japan, has agreed to scale down in FY23 and for the next fiscal year. This change can turn out to be not a great year for Indian start-ups. The announcement was made after SoftBank posted a record annual loss of $13 billion in FY22, with some of its key portfolio companies listed in public markets seeing a substantial drag.

Masayoshi Son, the CEO of Softbank, said that the investment giant is cautious and will adopt a better investment criterion in the coming future. He also added that he has faith in the evolution of technology, but there is a need to implement financial discipline as of now.

During the media briefing on Thursday, he said that they might not see any addition to their existing portfolio of 475 companies in FY23. Still, they are hopeful that the IPO markets will recover in the next few years, and they will switch to offence mode. He further added that though the investments from SoftBank peaked in Q1 of FY22, they slowly decreased in Q4 and FY22 as the tech stocks saw a rout the world over.

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Particularly, shares of some key companies in Softbank’s portfolio, namely South Korea’s Coupang Inc. and China’s Didi Global, have dropped by more than 50% in Q4 FY22, thus destroying billions of dollars from Softbank’s portfolio.

Indian Fintech companies like Paytm and PolicyBazaar are also mentioned in Softbank’s earnings presentation. According to the report, Softbank had invested $1.4 billion in Paytm, whereas an investment of $400 million in PB Fintech (PolicyBazaar’s parent firm) has a fair value of $100 million recently.

The data collected from research firm Venture Intelligence displays that in 2021, Softbank continued to be one of the top investors in the Indian start-up ecosystem when it came to writing big cheques for companies, with the Japanese major having invested $1.57 billion in the past year.

Concurrently, Indian markets collapsed on Thursday morning due to a global economic slowdown and inflation concerns. In particular, the tech stocks are witnessing a free fall, with the firms’ valuations at a record low since their listing.

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