The current financial situation must be addressed to calm investors ’concerns and stabilize stock prices.
Editor’s note: This article is from ” Tencent News “.
Sun Zhengyi said that this is not necessarily a bad thing. He believes that as long as the funds and time are carefully transferred to those vision fund investment companies that are regarded as stable, startups are unlikely to be on the verge of bankruptcy.
On April 8th, according to foreign media reports, Masayoshi Son, the founder and CEO of Softbank Group in Japan, believes that as the company tightens financial expenditures, while the new coronavirus epidemic continues to shake the Japanese economy, At least 15 of the 88 companies invested by the Vision Fund will go bankrupt.
Vision Fund has always faced serious financial difficulties after suffering bad luck in its investment in WeWork, an office-sharing startup. WeWork’s valuation peaked at 47 billion U.S. dollars, and was once considered to be one of the top technology startups in the United States. When SoftBank invested in WeWork, the company was still run by co-founder Adam Neumann and was about to conduct a highly anticipated initial public offering (IPO).
SoftBank believes that the large investment in this startup is an important strategic move, and has invested more than 10 billion US dollars in the company. However, after just a few months, things started to get worse. Neumann was removed from his position as CEO. People have accused him of his strange behavior and selfishness. WeWork’s valuation has also plummeted from the original $ 47 billion to about $ 12 billion.
The Vision Fund subsequently reported that operating losses in the third quarter amounted to 225 billion yen (approximately US $ 2 billion), which erased almost all of Softbank ’s profits, changed its financial position, and panicked all investors. In a recent interview, Sun Zhengyi said that WeWork ’s valuation is too high.If he believed the vision described by Neumann. But he said: “We are now confident to introduce new management and new plans, we will reverse the situation and get considerable returns.”
Despite these guarantees, the progress of Sun Zhengyi ’s investment fund has not been smooth, and many start-up companies have been hit by the outbreak of the new coronavirus epidemic and are forced to stop operations, lay off or temporarily dismiss employees. The 62-year-old Sun Zhengyi has begun to make difficult financial decisions, including refusing cash injections, allowing other companies such as satellite service operator OneWeb to go bankrupt, and at the same time looking at certain investments (in some cases dozens Billions of dollars) are struggling.
Sun Zhengyi himself also made a bleak prediction, claiming: “I think at least 15 investment companies will go bankrupt.” But the tech tycoon said that this is not necessarily a bad thing. He believes that as long as the funds and time are carefully transferred to those vision fund investment companies that are regarded as stable, startups are unlikely to be on the verge of bankruptcy. SoftBank’s Vision Fund manages a total of 88 investments. Due to the recent turmoil, Sun Zhengyi said that future investment will also slow down.
However, the current financial situation must be addressed to calm investors ’concerns and stabilize stock prices. SoftBank has withdrawn its offer to acquire WeWork shares for $ 3 billion on the grounds that the offer failed to meet the conditions for the completion of the transaction and that “there are a number of new major criminal and civil investigations pending”. If the acquisition is successful, Neumann will be one of the main beneficiaries. In addition, Softbank also announced a $ 41 billion asset sale plan, including the sale of assets to boost share prices and reduce debt. A $ 4.8 billion repurchase plan not related to the latest plan is also in the pipeline.