The Confusing Sprawl of SoftBank’s Investments

Get the DealBook newsletter to make sense of major business and policy headlines — and the power-brokers who shape them.
__________

SoftBank’s many investments have become hard to keep track of.

The nearly $100 billion Vision Fund, led by the SoftBank chief executive Masayoshi Son and backed by Saudi Arabia’s Public Investment Fund, held 38 stakes at the end of September, according to SoftBank’s quarterly financial results. But some of the biggest and best-known names that you might associate with the fund weren’t among them.

The Vision Fund is capable of hugely influential transactions, such as the $15 billion-plus injection of additional capital into the office-sharing start-up WeWork that is currently under discussion, according to news reports. Despite the fund’s financial firepower, though, holdings sometimes end up elsewhere in the SoftBank sprawl.

A $5 billion investment in China’s Didi, originally made by SoftBank, is now housed in another vehicle altogether, known as the Delta Fund. It has been separate from, but generally mentioned alongside, the Vision Fund since it was revealed in 2017.

A big stake in Uber, meanwhile, is held by SoftBank, though it’s one of several that may be transferred to the Vision Fund in the future. The Saudi Public Investment Fund has its own direct investment in Uber, which is one reason other ride-hailing stakes are not yet part of the Vision Fund.

An investment in GM Cruise, General Motors’ self-driving unit, is also held by SoftBank, according to the company, even though when GM announced the $2.25 billion commitment in May the investor was stated to be the Vision Fund.

There are other foggy spots, too. SoftBank moved two investments into the Vision Fund last quarter: the Korean online retailer Coupang and the Indian hotel-reservations start-up Oyo. Coupang’s transfer value was marked down 30 percent from the $1 billion that SoftBank paid for it, while Oyo was marked up to around $200 million, from the original $100 million.

This all adds up to create a challenge when trying to understand SoftBank, whose stock trades at a wide discount compared to the theoretical value of its various businesses and investments.

Having an investment committee review these sorts of transactions would help. But because the ownership of SoftBank and the Vision Fund differs, it could be awkward if, say, the company’s Uber stake shifted to the fund at a price that was promptly contradicted by a planned 2019 initial public offering.

How the young fund fits with SoftBank remains a work in progress. And for now, it is depriving investors of full visibility.