SoftBank founder calls his judgment 'really bad' after $4.7B WeWork loss

Japan's SoftBank takes major hit after WeWork valuation tumbles

Softbank Group Corp. said it lost at least $4.7 billion on USA office-sharing company WeWork, an investment Chief Executive Masayoshi Son called an error in judgment.

The head of Softbank Group has admitted to some poor decisions after the firm reported its first April-to-September operating loss in 15 years. SoftBank's Vision Fund posted a 970.3 billion yen loss in the quarter, citing a drop in valuation of investments. The result is largely due to the performance of Softbank's Vision Fund.

SoftBank is on the hook for a $9.5B bailout to protect its $9B WeWork investment.

Its firebrand founder, Masayoshi Son, had taken huge financial risks by investing in startups like Uber and WeWork, the latter of which received more than $10 billion in bailout money last month after failing to go public. "I regret it in many ways", CEO Masayoshi Son said at a news conference, according to the Wall Street Journal.

The company is now said to be pulling out of at least half a dozen locations in Hong Kong, one of the world's most expensive property markets where ongoing protests have disrupted daily business activity, the Bloomberg news agency reported. The shrinking valuation of Uber and WeWork, once among the brightest stars in the SoftBank constellation, also raise prospects of more writedowns in Vision Fund's portfolio with its high exposure to businesses that prioritize growth over profitability.

The Saudi Arabia-backed Vision Fund, which is run by ex-Deutsche Bank banker Rajeev Misra, had invested $70.7 billion in 88 companies at the end of September. That compares with a 230.8 billion yen average of analyst projections compiled by Bloomberg and a 705.7 billion yen profit a year earlier.

Agents are approaching clients on behalf of WeWork to replace it in five other locations across the city, another person said.

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Son pointed out that while Uber's share price has fallen recently, it has risen since SoftBank invested in it.

As scrutiny intensifies into loss-making startups, SoftBank is struggling to recoup its investments by selling its stakes in such firms - an essential step to unlock capital to keep its investment juggernaut growing.

He added that WeWork was not a sinking boat, despite a need to cut spending.

The rescue of WeWork sets a bad precedent of "throwing good money after bad", Jefferies analyst Atul Goyal wrote.

But a string of recent failures has raised questions about his judgment. Those locations are in various stages of renovation but WeWork would consider relinquishing them if it finds companies willing to take over, that person said.

He said he has sent in Softbank Chief Operating Office Marcelo Claure, who oversaw the merger at Sprint, to lead WeWork and beef up governance measures there.

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