Lose 1 billion yuan every day! No more legend of sun Zhengyi? Ma Yun exits the board of directors of Softbank

 Lose 1 billion yuan every day! No more legend of sun Zhengyi? Ma Yun exits the board of directors of Softbank

In the world of venture capital, no one knows sun Zhengyi. The name almost exists as a God. He is known as Buffett of Asia, the great emperor of the electronic age and the man behind the Internet world. In Chinas venture capital industry, when it comes to sun Zhengyi, many people naturally think of Alibaba. The story of his early bet that Alibaba made 2000 times as much money can be said to be well known.

In recent years, sun Zhengyi has become more radical. With the first $100 billion vision fund, sun Zhengyi quickly established a technological Unicorn Kingdom, including Uber, Wework, didi and other super unicorns.

On May 18, Softbanks report card for the 2019 fiscal year was issued, with a net loss of jpy14381 trillion (about 95.6 billion yuan, equivalent to a daily loss of 1 billion yuan) in the first quarter of this year. The main reason for the huge loss is that Softbanks investment fund business, including vision Fund (SVF), has stepped on the shocking thunder. Is sun Zhengyis Unicorn plot vision or illusion?

Sun Zhengyi speaks at the performance briefing

The current world situation is grim, with bad news every day, and I personally reflect on it every day. Sun Zhengyi, chairman and President of Softbank group, opened the performance briefing on May 18.

In early April, the Japanese Softbank group (SBG) released its performance forecast of a huge loss in fiscal year 2019, which caused a huge stir, and there were four discussions about Softbank Waterloo.

On May 18, the report card of Softbanks 2019 fiscal year (April 2019 to March 2020) finally came out. The huge losses occurred in the first quarter of this year (January March 2020). Softbank groups net loss was 1.4381 trillion yen (about 95.6 billion yuan).

This level has set a new record for Japanese companies quarterly performance, surpassing the record of jpy13872 trillion in quarterly loss (January March 2011) set by TEPCO during the East Japan earthquake. In terms of the whole 2019 fiscal year, Softbank lost 1.36 trillion yen in operation and 961.6 billion yen in net loss, the highest since its establishment, with a net profit of 1.4111 trillion yen in the previous fiscal year.

Because of the huge loss, Sun said that all the dividends in 2020 are uncertain.

Last years big loss One point nine Trillion yen

The main reason for the huge loss is that Softbanks investment fund business, including vision Fund (SVF), has stepped on the shocking thunder. In fy2019, Softbanks investment funds as a whole lost 1.9 trillion yen.

Specifically, Uber, a car Hailing company, lost $5.179 billion in the whole fiscal year, mainly due to the market value reduction; the loss caused by the write down of investment in Wework, a US shared office, was $4.582 billion. In December 2019, the value of Wework was $7.3 billion, and by the end of March, it had shrunk to $2.9 billion. In addition, the new crown epidemic caused a loss of $7.502 billion to the funds portfolio.

Softbank set up a vision fund phase I with a scale of US $100 billion in 2017. Its portfolio includes arm, Uber, Didi travel, Wework and other companies. So far, 88 companies have been invested with a total value of US $69.6 billion.

Portfolio of vision fund phase I

We work, a non-U.S. shared office company, has fallen from its peak value of $47 billion to its current value of $2.9 billion. Softbank and Wework started in July 2017, when Wework received a round a financing of 500 million US dollars from institutions such as Softbank group. Since then, with the rapid expansion of Wework, Softbank has continued to make additional investment until it became its largest shareholder, with a valuation of US $47 billion.

Who knows that with the disclosure of Weworks prospectus, the unicorn bubble that looks very beautiful has been punctured. After the prospectus revealed the loss of $900 million in six months and the problems of company management, its valuation fell to $7.8 billion, down 80%, and the IPO application was withdrawn. Softbank, the largest shareholder, was hit hard, with an operating loss of y704.4 billion in the second quarter of fy19f (July September 2019), mainly due to a significant write down in the valuation of Wework. Since then, Softbank has not given up Wework and announced a massive $9.5 billion blood transfusion plan, which the two sides reached an agreement on in October 2019.

In early April, however, Softbank withdrew some of its investment in the deal, involving $3 billion. On April 7, a special committee under the board of directors of Wework announced that it had filed a lawsuit in the equity court of Delaware, accusing Softbank of violating the agreement and failing to complete the aforesaid transaction.

Sun Zhengyi said that unicorns have fallen into the pit of the new crown (see above). Ubers current share price is about 70% of its IPO price. Softbank invested $1.5 billion in Indian Unicorn Oyo hotel. Last month, Softbank implemented salary reduction measures and temporary leave to deal with the impact of the epidemic. In addition, oneweb, a satellite operator invested by Softbank itself, filed for bankruptcy in March.

About 15 of the 88 companies invested by vision fund will go bankrupt, and it is expected that 15 companies will successfully leap the new peak and low valley , and may grow into the next Yahoo or Alibaba after 5-10 years. Sun Zhengyi said.

Launch self rescue and raise 1.25 trillion yen with Alibaba stock

Softbank has launched self rescue. From the first ten days of February to the second ten days of March, Softbanks share price was almost cut back. Although Softbank announced its first repurchase plan on March 13, with a scale of 500 billion yen, it failed to stop the decline. On March 23, Softbank disclosed a 4.5 trillion yen (US $41 billion) asset sale plan, of which 2 trillion yen (US $18 billion) will be used to buy back shares and the rest will be used to repay debts, purchase corporate bonds and increase deposits, which is expected to be completed in the next four quarters. Finally, the decline of the stock was stopped.

Where does the money come from? According to the analysis, Softbanks highly liquid Alibaba shares and its communication subsidiary shares will be included in the sale plan.

Photo source / Softbank presentation

On May 18, Softbank announced that it would complete the share buyback of 500 billion yen by March 2021. Sun Zhengyi also said on the same day that he had reached an agreement with the bank to use Alibaba stock to raise 1.25 trillion yen in April and may, including forward contracts and collar contracts. In addition, sun Zhengyi did not forget to show the success of Softbanks investment in Alibaba at the conference.

Alibaba market value trend (picture source / Softbank explanation meeting)

In the question section of the explanation meeting, someone asked if vision fund had failed. I think you must let me admit that this is a failure, but I want to say that you should look at this problem from the foundation of the fund, and look at it in the context of the global stock market crash this year. The rest is left to your own judgment. Sun Zhengyi said.

Just last August, the group announced the establishment of vision fund phase II, with a scale of US $108 billion, focusing on investment in artificial intelligence. However, in the current environment, whether the second phase can be smoothly promoted has become a big suspense. Sun Zhengyi said that eight companies in the vision fund portfolio have been listed, and these investments can be recycled for the second phase investment, or soft banks own funds can be used for investment first. After making achievements slowly, relevant external investors will be interested in participating.

Even if there is an epidemic, we have not frozen new investment. But we will learn from the experience of vision fund phase I, which is not so radical. Sun Zhengyi said.

Ma Yun will resign from the board of directors of Softbank

In addition to the huge loss of performance, on the same day, Softbank also announced that Ma Yun, founder of Alibaba group, would step down as a director of the group on June 25, when the regular general meeting of shareholders was held. Ma Yun has been a director since June 2007. Softbank didnt explain why he left office.

Photo source / photo bug idea

We are like-minded friends. Ma Yun, who resigned as chairman of Alibaba group, will leave the front line of management. Before the outbreak, we eat together every month to share management ideas. This time, we also increased the number of board members from outside to four. The board of directors of Softbank is not a talk, but a discussion atmosphere. Sun Zhengyi said.

Ma Yun is not the first director of Softbank to step down. Just at the end of December last year, Softbank group issued a statement,

Liu Jingzheng, CEO of UNIQLOs parent company, announced his retirement from the board of directors of Softbank group. He has been a director of Softbank for 18 years.

According to relevant reports, Liujing has expressed dissatisfaction with the investment in Wework. On the same day that Softbank officially announced to invest in Wework in 2017, Liu Jingzheng said in an interview, Sun Zhengyi has a bad problem, that is, his interest is constantly changing, and he wants to do what he wants. But thats what makes him attractive.

(function() {(window. Slotbydup = window. Slotbydup| []). Push ({ID: u5811557, container: ssp_, async: true});}) (); relevant recommended shares of Softbank will be repurchased by 500 billion yen. Ma Yun will resign from the board of directors for 13 years. Ma Yun will withdraw from the board of directors of Softbank. New nominated directors disclosed in this article source: responsibility editor of economic report in the 21st century: Wang ning_