As the value of portfolio companies plummeted, SoftBank shares fell

SoftBank Group’s share price fell 8% on Monday, falling for the seventh day in a row. The growing problems of its portfolio companies Didi Chuxing and Arm have renewed concerns about the Japanese technology group’s business model.

The fall in SoftBank’s shares was part of a broader regional sell-off of technology-related stocks in Asia on Monday. Alibaba, an e-commerce company founded by Jack Ma, is also the most valuable of Softbank’s investments, with a drop of 8%.

SoftBank’s share price fell to 5,062 yen ($45) in Tokyo, its lowest level since June 2020. Delisting its shares Stocks from the New York Stock Exchange are particularly chilling.

Although the Hong Kong Stock Exchange where Didi plans to relist is also easy to obtain high valuations for technology companies, SoftBank investors have begun to look forward to a business model in which the Japanese company seeks to sell shares in the United States to obtain the highest value in its portfolio. Valuation company.

Traders and fund managers said that since mid-November, the continued decline in SoftBank’s share price may cause the market value of billionaire Son Zhengyi to shrink by more than a quarter. Reinvigorate short-term speculation -And potential shareholder pressure-to demand huge share repurchases.

Last month, Sun Zhengyi seemed to succumb to investor pressure and promised to $8.8 billion stock repurchase Over the next 12 months, the group’s Vision Fund reported a record quarterly loss.

SoftBank has prominently published a calculator of the company’s net asset value per share on its company’s website-a figure that has always reflected a significant “corporate group discount,” which has long been the source of Sun Zhengyi’s frustration. As of Monday morning, SoftBank’s trading price was more than 50% lower than its stock price. Net asset value on October 1.

Richard Kaye, Comgest’s portfolio manager and long-term shareholder of SoftBank, said: “Conglomerates are discounting a lot, and in days like today, the debate about buybacks will become more intense.”

“But from the company’s perspective, I think SoftBank would rather spend its money on other projects with higher returns than buying its own stock. I don’t think SoftBank will rush to do anything,” he added.

The U.S. Federal Trade Commission filed a lawsuit last Thursday, adding to the pressure on the Japanese group. Block the acquisition Developed by Nvidia, the graphics processor group of Arm, a British chip designer under the SoftBank Group. The expected transaction is up to 40 billion U.S. dollars in cash and stock transactions.

U.S. regulators argued in a statement that the transaction would allow the combined company to “stifle the competition of the next generation of technology.” Analysts reporting on SoftBank said that the company may have been fully prepared for the possibility of the FTC move.

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