Major Japanese investor finds himself caught in another cigarette
SoftBank Group has made some of its latest investments as some of them have proven to be nearly worthless.
One of the largest Japanese investors, Softbank made a bet on crypto by investing $100 million in brokerage firm FTX, which some investors like Sequoia Capital say is worth zero.
SoftBank said on Friday that its investment in bankrupt crypto exchange FTX had minimal impact on the $100 billion Softbank Vision Fund.
FTX, based in the Bahamas, was valued at $32 billion just last year.
SoftBank Chief Financial Officer Yoshimitsu Goto said the investment in FTX is only a small stake.
“If there’s any price drop, that’s not a big deal for us,” Goto said in the company’s second-quarter earnings report.
The Vision Fund’s priority, he said, is to invest in artificial intelligence companies, not cryptocurrencies, but it sees blockchain technology as more of an investment opportunity.
“Investing in real currency is a bit different from our vision,” Goto said. “Through the crypto business, there could be something coming to the technological revolution like blockchain that could be a positive thing for AI. So that could be some interpretation to make the investment. “
On Friday, Masayoshi Son’s SoftBank Group reported a profit of more than $21 billion last quarter after it divested at Alibaba Group. (BABAF) China’s e-commerce giant.
SoftBank Vision Fund Investment Loss
But SoftBank now depends on the Vision Fund, which invests in startups, to generate more profits. The fund itself reported a loss of $10 billion for the final quarter ending September.
Recent missteps from SoftBank include massive losses in shares of companies like WeWork, a co-share company, DoorDash (DASH) – Get a free reporta food delivery company, and Compass, a real estate brokerage.
SoftBank shed $5.8 billion on holdings of more than 300 startups, including companies in the areas of autonomous driving and biotechnology.
Dozens of private equity firms and venture capital firms along with wealthy individuals like defender Tom Brady have invested in FTX, which was founded in 2019 by Sam Bankman-Fried.
Sequoia and SoftBank are some of the larger investors in FTX, which filed for bankruptcy on Friday.
FTX raised $420 million in an October 2021 funding round that included the Ontario Teachers’ Retirement Plan, Canada’s third-largest pension fund. Other investors include Temasek, Sea Capital, IVP, ICONIQ Growth, Tiger Global, Ribbit Capital, Lightspeed Venture Partners, and funds and accounts managed by BlackRock.
Sequoia sent a letter to its limited partners on November 9, saying that it now values its $210 million investment in FTX at $0 and that it is a total loss.
“Based on our current understanding, we are marking our investment down to $0,” said the Silicon Valley-based company.
Ontario Teacher’s Pension Plan invested $75 million in FTX International and its US institution, FTX.US, in October 2021. In January, the pension fund invested an additional $20 million in FTX.US .
This investment represents less than 0.05% of the fund’s total net assets.
Both investments were made in US dollars and through the institution’s Venture Growth (TVG) platform as the pension fund believes it needs “small-scale access to an emerging sector of the industry”. financial technology sector.”
The pension fund, ranked in the global top 20 by wealth, manages $242 billion in assets for 330,000 current and retired teachers.