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SoftBank liabilities: Founder Masayoshi Son owes SFTBY $4.7bn - Is the billionaire good for it?

By David Burrows

16:33, 18 November 2022

Softbank founder and CEO Masayoshi Son. Photo: Getty
Softbank founder and CEO Masayoshi Son. Photo: Getty

Softbank (SFTBY) founder Masayoshi Son is now personally liable for about $4.7bn as a result of the Japanese billionaire’s personal stakes in ill-judged Softbank investments.  

The mix of personal and company interests in early-stage tech investments had long been picked up on as contentious corporate governance issue.  

Son has always defended his position, insisting there was no conflict of interest.  

However, the upshot is that Son’s personal finances are now under pressure as a result of major losses on his failed tech bets.

The value of Son’s 17.25% stake in SoftBank’s $56bn Vision Fund 2 was wiped out entirely by the end of September this year -  at one point his stake was
worth $2.8bn and that is what Son now owes Softbank.  

Son also owes SoftBank $669mn on its Latin American fund, which backed start-ups across LatAm.  When losses in the group’s internal hedge fund SB Northstar are factored in – this takes the overall amount to the $4.7bn figure reported. 

The question in regard to Son’s personal liability is: ‘is he good for it?’

In theory, yes. According to Bloomberg Billionaires Index, Son’s net worth currently stands at around $12.7bn. And this factors in the deficit from his interests in Vision Fund 2 and Latam fund.

However, you could argue that much depends on whether Son reins in his appetite for high-risk tech bets that got him into trouble in the first place.

Last week said he would step back from running day-to-day operations at the group. His main focus, he said, would be on the company’s UK chip subsidiary Arm.

US100

18,661.40 Price
+0.620% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 1.8

US500

5,309.30 Price
+0.070% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.8

US30

39,802.60 Price
-0.500% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 2.2

HK50

19,560.80 Price
-0.850% 1D Chg, %
Long position overnight fee -0.0225%
Short position overnight fee 0.0005%
Overnight fee time 21:00 (UTC)
Spread 30.0

But whether someone who has thrived on the adrenaline inducing thrill of high risk/reward investing will take a back seat for very long is open to question.

Softbank share price chart

Ben Yearsley, director at Fairview Investing believes Son’s ability to identify good business could yet pay dividends – assuming risk is controlled better.  

“It’s a fascinating business and he’s certainly a visionary entrepreneur. However, it feels as if more often than not recently his big bets have soured. I don’t think that makes him a poor investor. I think it means we are in a more normalised investment environment where winners take longer to come to fruition”.

He adds: “There is still good justification for backing early-stage businesses as long as you have a balanced portfolio.”

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Bad investments

Son sank around $100m into cryptocurrency derivatives exchange FTX and that investment has now been marked down to zero.

SoftBank also poured money into other companies that failed to ignite such as WeWork and Katerra, a construction tech start-up that burned through over $2bn in funding before closing in June 2021. Other ill-advised investments included blood testing company Theranos and digital mortgage lender Better.com.

The due diligence applied to these investments has inevitably been called into question. Will those taking punts on early-stage companies now tread more carefully after the losses we have seen of late?

Softbank group’s shares have fallen 10.74% over the last month – now at JPY 6,075.  

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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