China’s tech crackdown hit SoftBank like a ‘big winter blizzard’

SoftBank on Monday posted a loss of 397 billion yen ($ 3.5 billion) for the July-September quarter. Son said the value of the company’s net assets, which he says is a better indication of the company’s performance, fell by 6 trillion yen ($ 54.3 billion) to $ 187 billion.

The reason for the coup? “In a word: Alibaba,” Son said during a results presentation that opened with a picture of a snowstorm.

Alibaba was long the jewel in the crown of SoftBank’s investment portfolio, and Son and Alibaba co-founder Jack Ma are close friends. The Japanese businessman invested $ 20 million in Alibaba more than 20 years ago, turning that bet into one worth $ 60 billion when Alibaba went public in 2014.

China & # 39;  s & # 39;  unprecedented & # 39;  The repression surprised private companies.  A year later, you may have to cut back on business a bit
But Beijing’s vast regulatory review has weighed heavily on Alibaba and other Chinese companies over the past year. Alibaba was fined with a record $ 2.8 billion after authorities accused the company of acting as a monopoly. And its financial subsidiary, Ant Group, has been controlled by regulators after its IPO was canceled at the last minute a year ago.
Alibaba has lost about $ 400 billion in market value in the past year while navigating a series of new Beijing regulations. Its share price fell 35% in the July-September quarter.

China’s regulatory actions have hurt Softbank’s huge Vision Fund investment portfolio, which posted a loss of about $ 10.5 billion for the quarter.

“We’re not proud of that either,” Son said, adding that Chinese companies, including the transportation services giant I made, played a major role in the fund’s poor performance. The company’s initial public offering in the United States this summer collapsed after Beijing launched an investigation into the company into its data collection and privacy practices and banned it from Chinese app stores. Didi’s share price fell 45% in the July-September quarter.

Eyes in india

But the Japanese billionaire remains optimistic about the future. He said the fund has a lot of “golden eggs” for this year, referring to a large number of companies in its portfolio planning to go public.

One of them is the Indian fintech firm Paytm, which launched the largest IPO on record in India on Monday. It is expected to start trading next week.

“Paytm should grow significantly,” he said in response to a question about the Indian company’s valuation. “For us, your IPO should be a great event.”

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