SoftBank said to cut back on new investments in China - PingWest

SoftBank said to cut back on new investments in China

SoftBank said to cut back on new investments in China

August 11, 2021 9:38 pm

SoftBank is cutting back on new investments in China as the country's new economy continues to face regulatory blows.

Details: Masayoshi Son, CEO of the Japanese conglomerate, said at an earnings presentation Tuesday that he would take a cautious approach until the impact of new regulations are clear.

As of the end of July, Chinese companies accounted for 23% of SoftBank's Vision Fund portfolio. But Son told that since April, only 11% of Vision Fund investment has been directed to the country.

In recent months, China's continuous crackdown of the Internet industry, including anti-monopoly penalties against giants, prohibition of K-12 after-school education, and strengthening supervision of overseas listings, has caused huge panic among investors. So far, these events have wiped out more than $1.2 trillion in market value.

"Although SoftBank is the only company (that announced the cutback in investment), it will affect the financing of many high-value Chinese start-ups," said David Zhang, managing partner and cofounder of Matrix Partners China .

Context: As one of the world’s largest technology investors, SoftBank has a strong presence in China, holding shares in many top Chinese companies, including e-commerce giant Alibaba, ride-hailing giant Didi, TikTok owner ByteDance, and online education platform Zuoyebang.

Didi and Zaoyebang are particularly painful. Soon after the ride-hailing giant made a low-profile initial public offering in the US, it was ordered to be removed from mobile app stores and make rectifications. Affected by this, Didi’s share price has been severely hit, and it is currently far below the IPO price. China bars private education firms from raising money through IPOs  also means that SoftBank's investment in Zuoyebang barely can be cashed out.

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