Sun Zhengyi stepped down from the altar
Editor’s note: This article comes from WeChat public account “Slightly larger reference” (ID: hyzibenlun) < / a>, author: Jiang Xin.
Zheng Zhengyi is experiencing a crisis of trust. In this case, he had proposed to privatize SoftBank Group. At present, this plan is finally abandoned. So there is only one way left: “cutting meat” into cash-reducing leverage by selling “households” while increasing liquidity.
Softbank should be provoked.
To avoid the risk of a rating downgrade, SoftBank Group said on Monday that it will sell about $ 41 billion in assets to adjust its debt-laden balance sheet. According to Bloomberg News, even the most cherished Alibaba stock was used in the asset package for sale.
Two days later, the US rating agency Moody’s still downgraded SoftBank Group’s rating to Ba3, and the outlook is a negative observation. SoftBank reacted fiercely and asked Moody’s to withdraw its rating, citing that its actions were too pessimistic and the downgrade was unfounded, which also led to misunderstandings among investors.
The outcome of the game is unknown, but the crisis and dilemma of SoftBank and its founder, Sun Zhengyi, have been spread to the public amidst the downgrade of ratings and the storm of asset sales.
01
The sale of “family goods”, Softbank’s decline
Whether it’s a company or an individual, changing sellers can easily be seen as a sign of decline.
According to SoftBank’s self-rescue plan, this time $ 18 billion will be allocated for share repurchases, and another $ 23 billion will be used to redeem bonds and establish cash reserves.
Keeping cash reserves and a healthy asset-liability ratio are lessons learned by Sun Zhengyi from the Internet bubble crisis of 2000. At the height of the bubble, his personal property soared by $ 10 billion a week, which also created a short-lived wealth myth-surpassing Bill Gates and becoming the new richest man in the world. But the myth ended after 3 days. With the collapse of U.S. technology stocks, SoftBank’s stock price fell 99% in one year, and $ 200 billion fell to $ 2 billion.
Time to 2020 is another sad year for SoftBank. Before this year, SoftBank was one of the boldest investors to provide funding for unicorn companies with a global valuation of more than $ 1 billion. Sun Zhengyi was the godfather of investment on the top of technology and the Internet. The world; but as star projects have burst through the bubble, market trends and reviews have changed.
The latest financial report released in February this year showed that SoftBank’s operating profit for the third fiscal quarter of fiscal 2019 fell 99%. What weighed down the earnings data was the heavily-lost Vision Fund, whose loss almost wiped out SoftBank for a quarterProfit. The Vision Fund itself has a scale of US $ 100 billion, but the star unicorns such as WeWork and OYO invested by Sun Zhengyi have suffered serious losses or their valuations have shrunk sharply. Real blood transfusion for them.
After all, during the epidemic, the areas of joint office, hotel accommodation, and travel will be greatly affected. Other assets such as chip maker ARM, which was initially invested by the Vision Fund, are difficult to realize quickly because they are not listed.
The epidemic has also caused global stock markets to crash like dominoes. U.S. stocks have melted down four times in 10 days, and SoftBank’s stock price has fallen from its peak in early February this year, and its market value has fallen by more than 40%.
Softbank itself believes that the company’s stock price is undervalued by about 74.6%, but investors have reasons to worry. SoftBank currently has large debt and very high leverage. Data show that among the companies in the Nikkei 225 Index, SoftBank’s average debt cost is the highest.
At the time of Softbank’s burnout, two directors of the investee company WeWork stood up and publicly criticized Softbank for violating the agreement to purchase $ 3 billion of WeWork stock and accused Softbank of trying to fail to perform the transaction. The excuse was neither appropriate nor honest.
It is obvious that Sun Zhengyi is experiencing a crisis of trust, in which case he It had been proposed to privatize SoftBank Group, but now this plan is finally abandoned. So there is only one way left: “cutting meat” into cash-reducing leverage by selling “households” while increasing liquidity.
Selling assets during periods of economic turmoil was originally a loss-making deal; but also because of economic turbulence, cash flow directly determines life and death. Sun Zhengyi, who has gone through the Internet bubble, should know this rule well.
02
Why sell “hard currency” first
Bloomberg News quoted anonymous sources as saying that SoftBank’s priority sale of assets includes Alibaba stock, which amounts to between $ 12 billion and $ 15 billion. Although the news is still to be verified, it is believed that Softbank is very likely to sell Ali shares.
This is naturally helpless. After all, at the financial report communication meeting in February this year, Sun Zhengyi made it clear that he would not reduce his Ali shares. He said he believed that Alibaba still had a lot of room for improvement and was not in a rush to sell.
When the news was announced, SoftBank held nearly 26% of Alibaba’s shares and was worth about $ 150 billion, which is more than Softbank’s own
Whether it’s a company or an individual, changing sellers can easily be seen as a sign of decline.
According to SoftBank’s self-rescue plan, this time $ 18 billion will be allocated for share repurchases, and another $ 23 billion will be used to redeem bonds and establish cash reserves.
Keeping cash reserves and a healthy asset-liability ratio are lessons learned by Sun Zhengyi from the Internet bubble crisis of 2000. At the height of the bubble, his personal property soared by $ 10 billion a week, which also created a short-lived wealth myth-surpassing Bill Gates and becoming the new richest man in the world. But the myth ended after 3 days. With the collapse of U.S. technology stocks, SoftBank’s stock price fell 99% in one year, and $ 200 billion fell to $ 2 billion.
Time to 2020 is another sad year for SoftBank. Before this year, SoftBank was one of the boldest investors to provide funding for unicorn companies with a global valuation of more than $ 1 billion. Sun Zhengyi was the godfather of investment on the top of technology and the Internet. The world; but as star projects have burst through the bubble, market trends and reviews have changed.
The latest financial report released in February this year showed that SoftBank’s operating profit for the third fiscal quarter of fiscal 2019 fell 99%. What weighed down the earnings data was the heavily-lost Vision Fund, whose loss almost wiped out SoftBank for a quarterProfit. The Vision Fund itself has a scale of US $ 100 billion, but the star unicorns such as WeWork and OYO invested by Sun Zhengyi have suffered serious losses or their valuations have shrunk sharply. Real blood transfusion for them.
After all, during the epidemic, the areas of joint office, hotel accommodation, and travel will be greatly affected. Other assets such as chip maker ARM, which was initially invested by the Vision Fund, are difficult to realize quickly because they are not listed.
The epidemic has also caused global stock markets to crash like dominoes. U.S. stocks have melted down four times in 10 days, and SoftBank’s stock price has fallen from its peak in early February this year, and its market value has fallen by more than 40%.
Softbank itself believes that the company’s stock price is undervalued by about 74.6%, but investors have reasons to worry. SoftBank currently has large debt and very high leverage. Data show that among the companies in the Nikkei 225 Index, SoftBank’s average debt cost is the highest.
At the time of Softbank’s burnout, two directors of the investee company WeWork stood up and publicly criticized Softbank for violating the agreement to purchase $ 3 billion of WeWork stock and accused Softbank of trying to fail to perform the transaction. The excuse was neither appropriate nor honest.
It is obvious that Sun Zhengyi is experiencing a crisis of trust, in which case he It had been proposed to privatize SoftBank Group, but now this plan is finally abandoned. So there is only one way left: “cutting meat” into cash-reducing leverage by selling “households” while increasing liquidity.
Selling assets during periods of economic turmoil was originally a loss-making deal; but also because of economic turbulence, cash flow directly determines life and death. Sun Zhengyi, who has gone through the Internet bubble, should know this rule well.
02
Why sell “hard currency” first
Bloomberg News quoted anonymous sources as saying that SoftBank’s priority sale of assets includes Alibaba stock, which amounts to between $ 12 billion and $ 15 billion. Although the news is still to be verified, it is believed that Softbank is very likely to sell Ali shares.
This is naturally helpless. After all, at the financial report communication meeting in February this year, Sun Zhengyi made it clear that he would not reduce his Ali shares. He said he believed that Alibaba still had a lot of room for improvement and was not in a rush to sell.
When the news was announced, SoftBank held nearly 26% of Alibaba’s shares and was worth about $ 150 billion, which is more than Softbank’s own
Bloomberg News quoted anonymous sources as saying that SoftBank’s priority sale of assets includes Alibaba stock, which amounts to between $ 12 billion and $ 15 billion. Although the news is still to be verified, it is believed that Softbank is very likely to sell Ali shares.
This is naturally helpless. After all, at the financial report communication meeting in February this year, Sun Zhengyi made it clear that he would not reduce his Ali shares. He said he believed that Alibaba still had a lot of room for improvement and was not in a rush to sell.
When the news was announced, SoftBank held nearly 26% of Alibaba’s shares and was worth about $ 150 billion, which is more than Softbank’s own