SoftBank Vision Fund may cut 10% of its workforce

SoftBank Group’s Vision Fund is planning to cut about 10 percent of its workforce of roughly 500, Bloomberg reported.
SoftBank JapanThe decision to cut jobs follows SoftBank Group’s financial performance. It reported $18 billion lose from the declining value of its startups.

The Vision Fund’s headquarters are in London, with additional operations in Tokyo and California. The job cuts will be across all levels of staff.

A spokesman for the Vision Fund declined to comment.

SoftBank founder Masayoshi Son and his $100 billion Vision Fund changed the tech industry by handing out enormous checks to relatively unproven startups. The fund went from SoftBank’s main profit contributor a year ago to its biggest drag on earnings. It lost 1.9 trillion yen ($17.7 billion) last fiscal year after writing down the value of investments, including WeWork and Uber Technologies.

The fund, led by Rajeev Misra, operates as a SoftBank affiliate with most of the money coming from limited partners, led by Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala Investment.

“It makes sense that SoftBank is cutting positions at the Vision Fund as they are in an extremely difficult situation, and they may start targeting highly paid workers to cut costs,” said Koji Hirai, head of M&A advisory firm Kachitas Corp. in Tokyo.

The Vision Fund grew after launch three years ago as Misra recruited scores of people from the finance industry, including many of his former colleagues from Deutsche Bank. Among its managing partners are several of the German bank’s ex-employees, including Colin Fan, former co-head of its investment banking division.

The fund also set up an unusual compensation structure that includes a $5 billion loan to employees. The debt is swapped for equity in the fund and generates profit when deals make money — and losses when they don’t, scaled by seniority

The Vision Fund currently manages more than 80 portfolio companies, but Son expects about 15 of the fund’s startups will likely go bankrupt while predicting another 15 will thrive.

“Vision Fund’s results are not something to be proud of,” Son said earlier this month as he announced record losses. “If the results are bad, you can’t raise money from investors. Things aren’t good, that’s why we are investing with our own money.”

The fund has already unwound some investments, including selling a nearly 50 percent stake in dog-walking startup Wag Labs back to the company last year. Son has said he plans to sell off about $42 billion in assets to finance stock buybacks and pay down debt.

SoftBank disclosed it’s unloading some shares in Alibaba Group Holding and is in talks to sell about $20 billion of T-Mobile US. It’s also exploring a deal for its stake in industrial software maker OSIsoft that could be worth $1.5 billion.

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