SoftBank’s Books Recorded $350-m Loss on In­vest­ments in Snapdeal, Ola

The Economic Times - - Disruption: Startups & Tech - Biswarup.Gooptu @times­

New Delhi: Af­ter its rep­re­sen­ta­tive on the board of its two most prom­i­nent port­fo­lio com­pa­nies — Snapdeal and Ola — Jonathan Bul­lock stepped down, Ja­pan’s SoftBank Group an­nounced that it had recorded a $350-mil­lion loss on its in­vest­ments in both com­pa­nies.

Both, Jasper In­fotech, which owns and op­er­ates on­line mar­ket­place Snapdeal, and ANI Tech­nolo­gies, which op­er­ates ride hail­ing app Ola, are two of the most high-pro­file bets taken by the Tokyo-based telecom­mu­ni­ca­tions-to-in­ter­net con­glom­er­ate, in In­dia.

In its third-quar­ter earn­ings re­port, the Masayoshi Son-led com­pany, which has pledged to in­vest $10 bil­lion in In­dia, said it had recorded a loss of about $350 mil­lion for both ven­tures for the nine-month pe­riod end­ing De­cem­ber 31. The nar­row­ing of the loss recorded by the com­pany comes on the back of the num­bers it an­nounced in Novem­ber last year, when it stated that it had recorded a loss of over $550 mil­lion for the six-month pe­riod end­ing Septem­ber 30, pri­mar­ily driven by pre­ferred stock held by it in both com­pa­nies, which was largely driven by ap­pre­ci­a­tion of Ja­pan’s Yen against the lo­cal cur­rency.

“Loss recorded as the amount of change in the fair value of the com­pany’s in­vest­ments, pri­mar­ily in In­dia, from the pre­vi­ous fis­cal year end to the end of the third quar­ter. Of this, a gain of ¥16,133 mil­lion was due to for­eign ex­change rate fluc­tu­a­tion,” the com­pany stated in its lat­est earn­ings re­port.

SoftBank did not state that it had marked down the value if its share­hold­ing in both com­pa­nies, which are cur­rently on the road to raise fresh rounds of fund­ing in an in­creas­ingly dif­fi­cult en­vi­ron­ment.

“With ref­er­ence to the cur­rent mark­down, port­fo­lio com­pany val­u­a­tions are of­ten driven by in­tri­ca­cies of ac­count­ing prac­tices and cur­rency fluc­tu­a­tions, and should not nec­es­sar­ily be seen as a re­flec­tion of their per­for­mance,” a SoftBank spokesper­son told ET.

This will come as some re­lief to both com­pa­nies. In Novem­ber, ET had re­ported that Ola, which is in a bru­tal war for mar­ket dom­i­nance with Uber, is pre­par­ing to bite the bul­let and ac­cept fresh fund­ing at a lower val­u­a­tion of $3 bil­lion, as it looks to ward off the world’s most richly-val­ued startup. The Ben­galuru-based com­pany was val­ued at $5 bil­lion post its last fund­ing round in Novem­ber 2015. Separately, Snapdeal has been in the mar­ket to raise fresh eq­uity fi­nanc­ing for its dig­i­tal pay­ments plat­form FreeCharge, which has been po­si­tioned as one of its cor­ner­stones of its growth.

SoftBank has pledged to in­vest $10 bil­lion in In­dia

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