Caixin
May 19, 2020 05:55 AM
BUSINESS & TECH

SoftBank to Sell Alibaba Stake as Fund Losses Mount, Ma Quits Board

Pedestrians wearing protective masks walk past signage for SoftBank Corp. near a store in Tokyo. Photo: Bloomberg
Pedestrians wearing protective masks walk past signage for SoftBank Corp. near a store in Tokyo. Photo: Bloomberg

Alibaba founder Jack Ma will step down from the board of SoftBank Group next month after serving as a director for 13 years, the Japanese conglomerate said Monday. SoftBank reported record annual losses the same day.

Ma’s resignation will take effect June 25, when SoftBank holds its annual shareholders meeting. The company nominated three new directors including CFO Yoshimitsu Goto for election at the meeting, SoftBank said.

SoftBank didn’t explain Ma’s departure. But it is the latest move by the Chinese billionaire to pull back from his business roles to focus on philanthropy. Ma, China’s richest man with net worth of $41.8 billion, retired as chairman of Alibaba in September. He stepped down as Alibaba CEO in 2013.

Ma’s departure is notable given his decade-long, close ties to SoftBank founder and CEO Masayoshi Son. SoftBank was one of the earliest investors in Alibaba, betting $20 million on the e-commerce platform in 2000, a year after Alibaba was founded. SoftBank currently owns around 25% of the Chinese company, which has a market cap of nearly $545 billion and is SoftBank’s most valuable investment. Ma joined SoftBank’s board in 2007.

“That’s sad, but we still keep in contact directly,” Son told investors on Ma’s exit. “We will remain friends for the rest of our life.”

SoftBank reported 1.36 trillion yen ($12.7 billion) in operating losses for the fiscal year ended March 31, its worst annual result. The losses were driven by the Vision Fund, the company’s $100 billion tech investment fund, which had operating losses of 1.9 trillion yen for the fiscal year.

The valuations of some of the fund’s biggest bets have plummeted amid market turmoil and business disruption caused by the Covid-19 pandemic.

“Values of Uber, WeWork and its three affiliates decreased, and total fair value of other portfolio companies decreased significantly,” SoftBank said in its financial report.

Office-sharing operator WeWork’s market cap plunged to $2.9 billion in March from $40 billion in September, wiping out billions of dollars of SoftBank’s investment.

In March, SoftBank pledged to sell 4.5 trillion yen assets, in part to finance a 2.5-trillion-yen buyback to prop up its share price.

Softbank Group will raise 1.25 trillion yen using Alibaba stock to fund the buybacks, Son said Monday. SoftBank entered into several prepaid forward contracts with banks in April and May using Alibaba shares to procure a total of $11.5 billion. That includes a $1.5 billion forward contract with settlement in April 2024, a $1.5 billion floor contract with settlement in December 2023 and January 2024 and an $8.5 billion collar contract with settlement from January to September 2022, according to the company.

SoftBank is also considering selling part of its T-Mobile shares to Deutsche Telekom AG to raise funds, the Wall Street Journal reported.

SoftBank has backed 88 start-ups through $75 billion of investments by the Vision Fund. But the investment value slid to $69.6 billion by the end of March. Son said about 15 among the 88 startups may end up with closure while the rest are struggling with the fallout of the Covid-19 pandemic. But he said he thought many of the companies still have great potential.

Ding Yi contributed to the story

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bobsimison@caixin.com)

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