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(Bloomberg) -- SoftBank is planning to take a writedown to its Vision Fund of at least $5 billion to reflect a plunge in the value of some of its biggest holdings, including WeWork and Uber Technologies Inc., according to people with knowledge of the matter.
The Tokyo-based parent of the $100 billion Vision Fund, which began investing in 2017, is poised to unveil the writedown when SoftBank announces second-quarter earnings on Nov. 6, said the people, who requested anonymity because the matter is private. The writedown is being driven by the Vision Fund’s holdings in ride-hailing giant Uber and WeWork parent We Co., the beleaguered co-working company that SoftBank agreed this week to rescue, they said. SoftBank’s shares slid 2.7% to their lowest since January, putting the stock on track for a fourth straight day of losses.
Uber and WeWork, once among the brightest stars in the SoftBank constellation, now number among its worst performers. Their shrinking valuations have called into question billionaire Masayoshi Son’s investment credibility at a time he’s trying to raise an even larger successor to his original mega fund. The tepid performance of ride-hailing stocks in particular has influenced the way SoftBank is thinking about valuing its investments in the sector, the people said. Public markets have not been kind to either Lyft Inc. or Uber, which has tumbled more than 25% since its May initial public offering.
That has led the Vision Fund to reassess its recorded valuations of other ride-hailing companies, such as Didi Chuxing and Grab Holdings Inc., said the people. Between June 30 and Sept. 30, the value of SoftBank’s 13% stake in Uber decreased by about $3.5 billion, according to Bloomberg data.
The writedown could be as high as $7 billion, but the amount has not yet been finalized and could still change, one of the people said. That surpasses some market projections: Mizuho Securities analyst Yusuke Hori has estimated declines in portfolio companies could force SoftBank to book as much as a 500 billion yen ($4.6 billion) valuation loss. Representatives for SoftBank and the Vision Fund declined to comment.
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The Japanese conglomerate is due to report results in two weeks, when investors will zero in on how the WeWork deal affects its finances. SoftBank has said it didn’t get a majority of voting rights, meaning its troubled investee will be treated as an associate, not a subsidiary-- potentially keeping its balance sheet free of some $22 billion of debt and $47 billion in looming lease-payment obligations.