SoftBank has warned that it may not pay a dividend for the coming financial year, following an $18bn blow from the Vision Fund that plunged the Japanese group to a historic full-year loss.
The Japanese group reported an annual operating loss of ¥1.36tn ($13bn), in line with its previous warning. It also withheld dividend guidance for the first time since its 1994 listing as founder Masayoshi Son’s biggest bets via the $100bn Saudi-backed investment fund collapsed amid coronavirus market turmoil. Mr Son said only that no dividend was a possibility, but that the company might be able to pay one if conditions improved.
Alongside the results, SoftBank on Monday launched its mammoth share buyback and said that Alibaba founder Jack Ma would step down as a director after 13 years. Mr Ma’s is the latest in a string of high-profile departures following the group’s pivot from telecoms group to the world’s most aggressive investment powerhouse.
After pouring billions of dollars of cash into 88 start-ups, total gross gains realised from the Vision Fund since its launch in 2017 were less than $4.8bn.
In addition to the implosion of its biggest bet on WeWork even before Covid-19, the pandemic has wreaked havoc on other major SoftBank investments in ride-hailing and hotel groups including Uber, Didi and Oyo, resulting in a ¥1.9tn annual loss for the Vision Fund.
Shares in SoftBank closed up 1 per cent on Monday before the earnings release. The gains came after the company said it would buy back as much as ¥500bn of its own stock by March 2021, in the first tranche of the ¥2tn buyback plan announced two months ago.
The stock has climbed 72 per cent since hitting a four-year low on March 19, a sell-off that prompted SoftBank to unveil the buyback plan and a $41bn asset sale to reduce debt of ¥6.8tn.
Mr Ma’s resignation from the board follows the departure of other long-serving directors including Fast Retailing chief executive Tadashi Yanai, Nidec founder Shigenobu Nagamori and former Goldman Sachs banker Mark Schwartz.
Mr Ma and Mr Son are close friends and have been business partners since the SoftBank founder made his most successful investment, in Alibaba, in 2000. But the two Asian billionaires have taken separate paths, with Mr Ma retiring as executive chairman of the Chinese ecommerce group in September to focus on philanthropic projects in education.
Mr Ma warned in a panel conversation with Mr Son in December that included discussion about the Vision Fund that “too much money” inevitably leads to a “lot of mistakes”.
It was not immediately clear why Mr Ma decided to leave, but his departure coincides with the rollout of SoftBank’s asset sale, which is expected to include the offloading of its shares in Alibaba.
SoftBank said Mr Ma had asked to resign for “personal reasons”. Alibaba could not be immediately reached for comment.
SoftBank said it would add two new non-executive directors to its board: Lip-Bu Tan, founder of San Francisco-based venture capital fund Walden International and chief executive of Cadence Design Systems, and Yuko Kawamoto, a professor at Waseda Business School and its first outside director.
However, some analysts expressed reservations at the changes.
“We question whether these members would be able to challenge Son sufficiently to ensure good governance,” Lightstream Research analyst Mio Kato wrote in a note on research platform Smartkarma.