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SoftBank’s plans for a second mega-fund is affected by WeWork failure

(Reuters) – SoftBank Group’s founder and CEO Masayoshi Son is struggling to raise money for a second, a massive investment in the technology fund in the wake of its failed initial public offering of office rental company WeWork and the sliding ratings of the other large investments, according to two people familiar with the situation.

FILE PHOTO: a japanese SoftBank Group, Corp Chief Executive Masayoshi Son attends a news conference in Tokyo, Japan, on November 5, 2018. REUTERS/Kim Kyung-Hoon/File Photo

The son is still determined to go ahead with the Vision of the Fund, 2 even though some of the deputies have called for a delay, but the two people with knowledge of SoftBank’s internal discussions told Reuters. However, it is likely to be much smaller, at least in the beginning, then, of the $108 billion that SoftBank, said that it had been drawn up, when it was announced that the fund will be made in July, these people said.

The big investors have yet to log in, which is a $38 billion and the promise of a publicly traded SoftBank Group, is the single biggest stake, according to sources. The size of this building may be in doubt given that the recent investment of setbacks it has suffered, and the lack of available cash and cash equivalents in the balance sheet, according to a Reuters analysis.

The vision Fund and the SoftBank Group, declined to comment on the progress of the Vision of the Fund 2. the

The implosion of the valuation of WeWork, and ask questions about the business model have damaged the Son’s reputation as a smart investor, and then point to a huge write-down of the initial Vision for this Fund. They turned, and the Vision of the Fund, together donated more than $10 billion in investment, some of which, at a valuation of $47 billion in January. But WeWork was recently abandoned plans for an initial public offering that would have pegged the company’s worth at only $10 to 12 billion dollars.

The second fund will be a good short-Son’s purpose, or be demolished, it will have broad implications for Silicon Valley venture capitalists, executives, entrepreneurs and Wall Street investors.

The first Vision of the Fund, increased to $97 billion, was upended in the tech investing world with a huge bet on the fast-growing but unproven businesses. It was more than the total amount that has been collected by the entire U.S. venture capital industry by 2018, will give the Son a big influence on the start-up of the market.

Some skeptics say that the problems at the WeWork, and for the poor, for public use of, and the performance of money-losing companies such as Uber Technologies Inc. and Soft Technologies, Inc., will lead to a large decline in the value of many of the so-called “unicorn” start-ups worth more than a billion dollars.

“Radiation is all around us,” said Scott Galloway, an author and one-time entrepreneur who now teaches at New York University, who has been closely following the WeWork to speak.

To be sure, there are investments to be in the 80-plus companies with the Vision Fund is to be financed seems to be paying off soon. The delivery company, DoorDash, for one, has increased in value, at least on paper, of $1.4 billion as of last March, to $12.6 billion in May. SoftBank, which owns about a third of the views of the Fund, and in July, it reported a 62% rate of return on its investment, including the management and performance fees.

The son also has a track record of big scores in the $ 20 million that he has in China’s Alibaba Group Holdings, in the year 2000, is now worth more than $100 billion, for example. Most of the analysts assess the SoftBank Group to buy, and to say that it still has borrowing capacity, and its majority-owned telecom and internet unit of media, throws you off for a healthy profit.

THE DEBT PILES UP

Back in July, SoftBank said to a group of companies, including technology giants such as Apple Inc, Microsoft Corp, as well as a wide range of Japanese banks, and the uk’s Standard Chartered Plc would be happy to contribute to the Vision of the Fund 2. the However, it is not clear what the company’s obligations, and none of the corporate investors will have a track record of making a multi-billion-dollar obligations outside of the venture fund.

Microsoft, Apple and Standard Chartered declined to comment.

The Japanese settings typically, only a small amount, sources familiar with the matter said. At least as a financial investor, and is planning to make loans to the fund in lieu of contributions, in cash.

The japanese investment bank, Nomura Holdings, Inc., which was the lead underwriter for the initial public OFFERING of SoftBank’s mobile unit has decided not to include the money in the fund, according to a source familiar with the plans. Nomura declined to comment.

Saudi Arabia’s Public investment fund (PIF), which has contributed us $45 billion in the first Vision, the Fund is not large amounts of fresh money to invest, until the payment is received in anticipation of the sale of the assets, or the proceeds from the planned initial public offering of oil firm Aramco, according to people familiar with its finances. The Aramco offer has been long delayed, and there can be no assurance that it will be going ahead again next year.

The United Arab Emirates’ Mubadala fund is still going to have to invest in the Vision of the Fund as the 2 is search in the investment, the source familiar with the discussions said.

MEAN and Mubadala declined to comment.

THE PRESSURE IS ON SOFTBANK

The worsening of the turmoil on the WeWork continues to be a strain on SoftBank, and the first foundation. The price of the WeWork bonds has sunk to its credit ratings were cut, and major cuts are expected in the company’s business, including the possibility of thousands of layoffs. Some of the real estate, investors and analysts say that without further investment on your Son or entity, then it would be hard to stabilize, due to the size of future financial liabilities.

This is just one of the calls they turned to money. Some of the investors in the first Vision Fund received interest payments of 7% per year and are committed to, have an unusual structure, which creates a constant need for money. Some of that will come from the sale of the stake in the Indian e-commerce company, Flipkart, and a publicly traded chipmaker Nvidia Corp. (a), but SoftBank has also borrowed money to finance the payment of benefits to the investors.

They turned and there is a risk that there will be a deal that will merge its money-losing U.S. mobile operator Sprint Corp and T-Mobile US, Inc. can be blocked by an anti-trust lawsuit in the united states. If that happens, you will be leaving, they turned up with an expensive liability, analysts say.

SoftBank’s stock fell by 13% over the last month and is now trading at its lowest level since January. They turned operating cash flow negative last quarter of the year, and could struggle to raise the tens of billions of dollars in cash, a Reuters analysis of the balance sheet, it seems.

SoftBank does not have significant financial resources to the financing of the fund. On the 30th of June, of the $27.41 billion in cash and cash equivalents in the balance sheet. However, these and other non-current assets was more than offset by its near-term obligations.

Public offerings in the last few months have been a great nuisance. Since they are listed, shares of the ride-coming group and Uber have declined by 34 per cent and the company Slack, shares lost 4 per cent of gdp, this represents a reduction of 41 per cent from the high in June and July. The value of ride-sharing and self-driving technology companies may also be affected, as sentiment in the sector has cooled down.

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Along with the decline in the value of WeWork, the results are expected to drag down the view of the Fund’s returns, although it’s hard to get a grip on the precise numbers. SoftBank Group and reports to the general approach of Fund performance are based on a scale of a single measurement of data, but it is not in the public disclosure of the figures of the individual companies.

The son of a financing plan for the second, the Vision Fund, are based on a steady stream of Ipos, the existing view of the Fund’s business. However, with the loss of appetite for the Ipos of non-profitable companies are downsizing and concerns over a possible global recession in place, the timing isn’t the best.

“I think it’s very likely that they will have to delay their plans for a … fundraising efforts around the Vision of the Fund is 2,” he said to Andrea Lamari Walne, a Silicon Valley-based partner at Manhattan Venture ners, which will make it easier for secondary operations.

Reporting by Anirban Sen in Bangalore, Sam Nussey, and Takashi Umekawain in Tokyo, the, Tom Bergin in London, Saeed Azhar in Dubai, Stanley Carvalho in Abu Dhabi, by Jane Lanhee Lee in San Francisco, and Timothy McLaughlin in Boston; Writing by Jonathan Weber; Editing by Martin, Edward Howell, and Tobin,

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