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SoftBank Vision Fund valuation drops, Asia investments dip

Japan's SoftBank Group Corp. saw the fair value of its Vision Fund drop in the quarter to end-September, accompanied by a dip in the number of investments in Asia, data compiled by S&P Global Market Intelligence showed.

SoftBank Vision Fund LP's valuation excluding exited investments was US$77.6 billion at the end of September, compared to US$82.2 billion in June. Holdings in sectors including transportation and logistics, real estate, health technology and enterprise saw a quarter-on-quarter fall in fair value.

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The quarter also saw SoftBank's Vision Fund and Delta Fund record a loss for the first time since their inception in 2017, of US$8.76 billion. The Delta Fund has a smaller portfolio which includes Chinese ride-hailing company Didi Chuxing Technology Co. Ltd.

SoftBank Group recorded an unrealized loss on the valuation of investments totaling ¥1.128 trillion due to a decrease in the fair value of 25 investments including Uber Technologies Inc. and WeWork Cos. Inc. and its three affiliates. The company saw an unrealized gain on ¥589.65 billion of investments because of fair value increases across 25 investments including India-based OYO and its affiliate.

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IPO efforts at portfolio companies have continued despite the fund's issues. OneConnect priced its IPO of 31.2 million American depositary shares at US$10 per ADS and the company started trading on the New York Exchange on Dec. 13. Beijing-based robotics company CloudMinds Inc. delayed its U.S. IPO this year but still intends to list following a cross-over funding round, as previously reported.

The number of Vision Fund investments in Asia-based companies fell from 42 in April to 31 in September. The bulk of the company's investments are in U.S.-based companies, with China and India seeing nine and 10 capital injections, respectively.

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Vision Fund 2

SoftBank's Masayoshi Son announced plans for a second Vision Fund in July, expecting to bring in investors such as Apple Inc., Microsoft Corp., Foxconn, Mizuho Bank, Standard Chartered and the Kazakhstan sovereign wealth fund.

He initially targeted an US$108 billion fund size, but on a Nov. 6 earnings call said he expects the Vision Fund 2 to be "roughly the same size" as US$100 billion Vision Fund 1. News reports suggest SoftBank is scaling back the second fund by as much as 30%.

There are reportedly several Vision Fund 2 investments in the works, potentially including US$150 million in healthcare company Honor. SoftBank has also reportedly participated in a financing round for Chinese online property listing service Beike Zhaofang, according to a Nov. 17 Bloomberg News report. SoftBank Group reportedly raised roughly US$2 billion for the fund in its first close.

Analysts said the company's decision to bailout WeWork with a US$9.5 billion rescue plan will make sticking to SoftBank Group's US$38 billion Vision Fund 2 pledge harder. SoftBank has reportedly hired Goldman Sachs Group Inc. to arrange a US$1.75 billion line of credit for WeWork, having already launched a US$3 billion tender offer for the office space company.

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As of Dec. 13, US$1 was equivalent to ¥109.21.