SoftBank is reportedly under fire from investors after its WeWork debacle

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  • SoftBank is under fire from shareholders over the WeWork debacle, other poor investments, and part of its plan to finance its second Vision Fund, according to the Wall Street Journal.
  • Capital Group, Tiger Global Management, Southeastern Asset Management, and other investors privately blasted the Japanese conglomerate over recent losses in its Vision Fund, the newspaper reported.
  • AllianceBernstein, Odey Asset Management, and others slammed SoftBank’s intention to lend up to $US20 billion to CEO Masayoshi Son and other executives for them to invest in its second Vision Fund, the Journal said.
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SoftBank is under fire from shareholders over the WeWork debacle, other poor investments, and part of its plan to finance its second Vision Fund, according to the Wall Street Journal.

Capital Group, Tiger Global Management, Southeastern Asset Management, and other investors privately blasted the Japanese conglomerate over recent losses in its Vision Fund, the newspaper reported, citing people familiar with the matter.

AllianceBernstein, Odey Asset Management, and other shareholders have joined the disgruntled investors in slamming SoftBank’s intention to lend up to $US20 billion to CEO Masayoshi Son and other executives for them to invest in Vision Fund II, the Wall Street Journal reported.

The investors view the loans as risky and argue they could spark conflicts of interest, the Journal said. For example, if executives are on the hook to SoftBank, they may be incentivized to achieve short-term gains at the Vision Fund to repay their loans, at the expense of the long-term health of the Vision Fund and SoftBank.

Capital and AllianceBernstein told SoftBank executives that Son shouldn’t take part in the initiative, according to the Journal.

Some investors raised their concerns with Son and the Vision Fund’s finance chief, Navneet Govi, at SoftBank’s earnings presentation last month, the newspaper said.

SoftBank slashed its valuation of WeWork by more than 80% to less than $US5 billion in the three months to September 30 after the coworking group’s IPO fell through, leaving it short of cash. The pair agreed a $US9.5 billion rescue deal last month, but SoftBank delayed its tender offer – a commitment to buy up to $US3 billion worth of WeWork shares – by nearly three weeks as it explored ways to save money and shrink cofounder and former CEO Adam Neumann’s $US1.7 billion departure deal, according to Bloomberg.

WeWork’s fall from grace fuelled an $US8.8 billion loss at the Vision Fund last quarter. The $US100 billion fund has also written down the value of its investments in Uber, Slack, and a slew of smaller startups recently.

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