The London-based Vision Fund began notifying some of its employees about the cuts on Thursday, according to sources. The Vision Fund has about 500 employees, and it is estimated that about 150 will be affected.
The fund’s investment performance has deteriorated due to the global decline in tech stock valuations. SoftBank reported a record consolidated net loss of ¥3.16 trillion (US$21.8 billion) in the April-June quarter. At its earnings conference in August, Chairman and CEO Masayoshi Son said he would make “significant cost reductions” at the Vision Fund.
SoftBank launched the nearly US$100 billion Vision Fund five years ago to invest in the world’s leading unicorns – private companies with a valuation of US$1 billion or more. Until June, the first fund and its successor, Vision Fund 2, had collectively invested about US$140 billion in 369 companies, according to SoftBank’s financial statement.
But as publicly traded tech stocks declined due to rising interest rates, so did the valuations of the unlisted stocks in which it invested. The valuation of Klarna, a Swedish fintech company and one of Vision Fund 2’s portfolio companies, fell from US$45.6 billion in June 2021 to US$6.7 billion in July this year.
Outside of the Vision Fund, SoftBank has sold shares in Alibaba Group Holding, announcing in August that it expects to book a ¥4.6 trillion pretax profit from the transaction. It is also working on an initial public offering of Arm, its UK semiconductor subsidiary that it bought in 2016 for about US$31 billion.
The Vision Fund is cutting costs through restructuring and slowing the pace of new investments during the downturn. It made only one investment in August, in Chinese enterprise software company Dianxiaomi, and another one so far in September, in US biotech company ArsenalBio, according to CBInsights.
Rajeev Misra, the head of the first Vision Fund, has stepped back from making investments at the second fund and resigned as a corporate officer and executive vice president at SoftBank. In July, Son said he would take on a “more direct leadership role” in managing the second Vision Fund.