The spectacular collapse of Silicon Valley Bank might increase trouble for other US lenders, and bring SoftBank Group Corp. investments under tightened scrutiny. The shaken confidence of the investors might even bring down SoftBank Group Corp's share below CEO Masayoshi Son’s pain point, reported Bloomberg.
The US tech lender's failure has raised the investor concern over the exposure to start-up firms in the SoftBank Vision Funds. Notably, SoftBank shares have plunged 13% in four sessions to below 5,000 yen and are nearing a level that some see as Son’s threshold for announcing a buyback.
SoftBank has made it clear that it expects barely any impact from the US lender's collapse, but the assurance fail to convince investors who are still apprehensive of its unscathed survival
SVB fallout a testimony of tough situation for startups
'Startups' funding conditions were getting harder and the window for IPOs was narrowing even before SVB’s failure," Tetsuro Ii, chief executive at Commons Asset Management Inc. told Bloomberg.
He even hinted of the further worsening of the situation in the coming time. To avoid the situation, SoftBank might have to mark down the value of private companies it has invested in, said the New-York-based media firm. Company's most notable publicly traded investment in Alibaba Group Holdings Ltd will be a tough game for SoftBank as Alibaba Group Holding' are down 30% from a January high amid a selloff in Chinese stocks.
The situation will not be taken by investors positively as SoftBank is already facing losses that brought it down 30% from a November peak.
The company has registered a cumulative net loss of about $22 billion over the past four quarters amid declines in portfolio holdings including WeWork Inc.
According to Bloomberg Intelligence analysts Marvin Lo and Chris Muckensturm, the SVB's collapse can also trigger SoftBank to raise cash by selling Alibaba shares, as it positions itself to backstop some of its startups from any spillover effect. "Such a step would probably diminish prospects of a share buyback," said the analysts.