SoftBank Group Corp reported a quarterly loss on Monday as the Japanese conglomerate was whiplashed by a $10 billion hit at its Vision Fund unit amid falling valuations and a Chinese regulatory crack down on tech firms.
While CEO Masayoshi Son describes SoftBank as a goose laying "golden eggs", referring to its stakes in startups that go to market, IPOs have dropped off and shares in many top assets fell during the quarter like online retailer Coupang that gave up a third of its value.
"The strategy of let's create the perception of enhanced value by taking things public hasn't really worked this year," Redex Research analyst Kirk Boodry said.
Depressed valuations in SoftBank's China portfolio continued to drag, with its stake in ride-hailer Didi, acquired for $12 billion, currently valued at $7.5 billion.
The group's largest asset, Chinese e-commerce firm Alibaba, fell by around a third in the second quarter.
Bright spots for the Vision Fund include its India portfolio with ride-hailer Ola and logistics firm Delhivery targeting listings.
"The pipeline is very robust," Navneet Govil, Vision Fund's chief financial officer, told Reuters in an interview.
The planned listing of Southeast Asian ride-hailer Grab via a merger with a special purpose acquisition company (SPAC) will provide further valuation upside, Govil said.
The group's net loss of 397 billion yen ($3.5 billion) compared to a profit of 628 billion yen a year earlier. Vision Fund's investment loss totalled 1.167 trillion yen.
The group has returned $9.8 billion to investors and is currently focusing on investing through its second Vision Fund that has $40 billion in committed capital.
The second fund had invested $33.5 billion in 157 startups at the end of the quarter. Eight of those firms have already listed.
SoftBank shares, which have lost around a quarter this year, closed down 0.77% at 6,161 yen ahead of earnings on Monday.
Son says change in the net asset value (NAV) of SoftBank's holdings is a better judge of performance than profit.
Its NAV was 15,450 yen per share on July 1, according to the conglomerate's calculations, when its share price was 7,775 yen.
($1 = 113.3500 yen)
(Reporting by Sam Nussey; Editing by Himani Sarkar)