Sliding valuations at its Vision Fund investment arm led to a record net loss booking this Monday for SoftBank. Their Chief Executive Masayoshi Son pledged to reduce investment activity and trim costs.
According to SoftBank’s statement, the estimated gain reported on Wednesday contains 2.4 trillion yen from the revaluation of shares in the Chinese e-commerce giant and a derivative income of 0.7 trillion yen.
SoftBank said that the transaction would stop worries regarding future cash outflows and reduce costs associated with these prepaid forward contracts.
The bank added that these would further strengthen its defense against the severe market environment.
Alibaba, the Chinese company’s growth that made it Masayoshi Son, bought one of the world’s biggest e-commerce companies for $20 million. That move enabled him to smooth his tech investor credentials.
On the other hand, that big business move cost Alibaba the loss of over two-thirds of its value from highs in late 2020, hit by Beijing’s crackdown on the tech sector and its scrutiny of founder Jack Ma.
The bank believes this transaction probably won’t result in additional sales of Alibaba shares on the market due to the shares being hedged at the time of the original monetization.
Ma left SoftBank’s board in 2020, and Son stepped down from Alibaba’s board the same year, which loosened ties between these two companies.
Betting on ventures such as retailer Didi Global led this Japanese billionaire to believe that this has aimed to highlight the decreasing size of China tech in his portfolio as market turmoil has hit valuations and U.S.-China tensions have grown.
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