SoftBank Plunges Into the Red as Chinese Tech Crackdown Squeezes Portfolio

(Nikkei Asia) — SoftBank Group swung to a net loss in the July-September quarter due to share price declines in some of its key investments, including South Korean e-commerce player Coupang and Chinese ride-hailer Didi Global.

The Japanese company on Monday reported a quarterly net loss of 397.9 billion yen ($3.5 billion), compared with a 627 billion yen profit a year earlier. Net profit for the six months ended September fell 80.7% from a year earlier.

The group's near $100 billion Vision Fund, which holds stakes in Coupang and Didi, as well as the $42 billion Vision Fund 2 reported investment losses of 1.17 trillion yen.

The Vision Fund posted a 1.2 trillion yen unrealized loss on its investment in Coupang and a 321 billion yen loss on Didi. Some of the losses were offset by the sale of some shares in Coupang as well as in U.S. companies Uber Technologies and food deliverer DoorDash.

The Vision Fund put about $12 billion into Didi for a 20% stake. Days after Didi went public in the U.S. at the end of June, it was forced to halt signing up new customers as Chinese regulators began investigating the company, citing data security concerns. Shares fell 45% between July and September, reducing the value of SoftBank's stake to about $7.5 billion at the end of September, according to FactSet data.

The regulatory crackdown hit elsewhere in SoftBank’s Chinese portfolio, including logistics provider Full Truck Alliance and housing broker Ke Holdings.

On the other hand, SoftBank said the valuations of some unlisted portfolio companies rose from a year earlier. SoftBank also generated a profit from the sale of shares in U.S. telco T-Mobile to German peer Deutsche Telekom.

Contact editor Flynn Murphy (flynnmurphy@caixin.com)

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