It turns out it isn’t just Softbank that’s getting creamed on its investments, billion head of the company Masayoshi Son is also personally feeling the pain of the poor performance in the technology market. And, on a side note, we may have finally found an “investor” whose acumen rivals Cathie Wood!
He has lost more than $4 billion “on a series of side deals he set up at SoftBank Group Corp. to boost his compensation,” according to a new Bloomberg report.
Son had established personal stakes in many of SoftBank’s ventures over the last few years. The thought process was that when the investments outperformed, it would act as a compensation kicker for Son, who currently draws a salary of about $740,000 per year.
Personally, Son holds a 17.25% interest in a vehicle belonging to SoftBank’s Vision Fund 2 for its unlisted holdings, and a 17.25% interest in part of its Latin America fund. He also has a 33% stake in a vehicle SoftBank set up to trade stocks and derivatives.
From these interests, he has racked up losses of $2.1 billion, $205 million and $2 billion, respectively, the report says. The amount Son owes his own company from the Vision Fund 2 and the Latam fund was up about $1.9 billion over the last quarter, the report says.
Marvin Lo, an analyst with Bloomberg Intelligence, said: “It is controversial for a business leader to mix his personal financial interests with corporate responsibilities. But Son explained before that he wanted to use co-investment to provide financial benefits to managers, similar to venture capital firm partners getting a 20% to 30% performance fees, but with a downside too.”
Son has deposited 8.9 million of his own shares as collateral for the Vision Fund 2 and 2.2 million shares as collateral for the LatAm fund.
Meanwhile SoftBank posted a glaring $23.4 billion loss for the June quarter last week.
Son said in a press conference: “We really believed we could do it and we had our heads in the clouds. Of course, the market was bad, there was a war, and there was the coronavirus. We can point to a lot of reasons, but these are all excuses. We have to self-reflect about the fact that if we’d been more selective and had invested more properly, it wouldn’t come to this.”
A SoftBank spokesperson said the money should be called a “net payable” instead of a loss by Son.
Because when it doubt, change the terminology or the definition – just ask the Biden administration!