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