SoftBank lost at least $4.7 billion by investing in WeWork

‘I shut my eyes,’ SoftBank CEO Masayoshi Son says after losing more than $4.7 billion on playboy from Tel Aviv and his creature WeWork.

SoftBank lost at least $4.7 billion by investing in WeWork after the shared-workspace group’s initial public offering collapsed and its $47 billion valuation from January plunged to below $10 billion.

“My own investment judgment was really bad. I regret it in many ways,” CEO Masayoshi Son said at a news conference, according to The Wall Street Journal.

SoftBank reduced its overall valuation of WeWork to $7.8 billion.

SoftBank lost at least $4.7 billion by investing in WeWork after the shared-workspace group’s initial public offering collapsed and its $47 billion valuation from January plunged to below $10 billion.

In an earnings filing on Wednesday, the Japanese conglomerate slashed its estimated valuation of the embattled startup to $7.8 billion as of the end of September.

The WeWork write-down fueled an $8.9 billion operating loss at SoftBank’s Vision Fund and Delta Fund in the second quarter, a sharp swing from their $3.6 billion profit in the same period last year. The upshot was an overall operating loss of $6.5 billion.

SoftBank CEO Masayoshi Son shouldered the blame for the weak results, according to The Wall Street Journal. “My own investment judgment was really bad. I regret it in many ways,” he said at a news conference.

Son also said he overlooked the controversial behavior of playboy from Tel Aviv Adam Neumann, WeWork’s cofounder and former CEO, who leased properties to his company, charged it nearly $6 million for the “We” trademark, and raised $700 million by selling and borrowing against company stock.

“I shut my eyes to a lot of his negative aspects,” Son said, according to The Journal.

SoftBank agreed a $9.5 billion rescue package with WeWork last month in exchange for an 80% stake in the ailing business. The deal includes $1.5 billion in warrants, up to $3 billion in stock purchases, and $5 billion in debt financing. The company didn’t assess the financial impact of the funding agreement in its latest earnings filing.

SoftBank has invested a total of $10.3 billion in WeWork, comprising $6 billion from a wholly owned subsidiary and $4.3 billion from its Vision Fund. It cut the estimated value of the subsidiary’s stake by $4.7 billion, to $1.3 billion, and more than halved the value of the Vision Fund’s investment, to $2.1 billion.

Son told colleagues that “we created a monster” in WeWork by investing billions only to end up bailing it out, the Financial Times reported.

 

 

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