Masayoshi Son Now Owes SoftBank $4.7 Billion on Side Deals

(Bloomberg) — Masayoshi Son is now personally on the hook for $4.7 billion in side deals he set up at SoftBank Group Corp. to boost his compensation, after mounting losses in the company’s technology portfolio eroded the value of his interests. Second Vision Fund.

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Over the years, the Japanese billionaire’s controversial personal stake in SoftBank’s investments drew ire from investors, who pointed to the mix of personal and company interests as a corporate governance concern. The son – who owns more than 30% of SoftBank’s stake – has denied a conflict of interest and said it was remuneration for his investment experience, rather than investment fees.

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The move has backfired, engulfing the son’s personal finances on the downside of the world’s biggest tech investor’s bet. Son took down more than $4 billion in its side deals in the June quarter, Bloomberg News previously reported.

Son said last week he was skipping key earnings calls to focus on chip designer Arm Ltd’s preparations for a public listing — an event that would fuel SoftBank’s pursuit of new investments again. SoftBank will bide its time during the technical winter and pay down the debt, he said.

The 65-year-old founding CEO owns 17.25% of the vehicle set up under SoftBank’s Vision Fund 2 for its unlisted holdings, as well as 17.25% of a unit within its Latin America fund, which also invests in startups. He has a 33% stake in SB Northstar, a company set up to trade stocks and derivatives.

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The son’s interests in the Vision Fund 2 and Latam Fund were structured so the billionaire did not pay cash for his 17.25% stake. The son is liable to pay 3% on the “unpaid equity acquisition amount”, interest which is wrapped up in his liabilities, until paid.

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Son’s net worth rose to $12.7 billion as of Thursday’s close, after adjusting for losses from his stakes in Vision Fund 2 and Latum Fund, according to calculations by the Bloomberg Billionaires Index.

SoftBank’s Vision Fund arm posted a $7.2 billion quarterly loss last week, which SenseTime Group Inc., DoorDash Inc. And driven by the declining value of portfolio companies like GoTo Group. The company has been selling assets to raise cash and shore up its balance sheet, posting a profit after selling part of its stake in Alibaba Group Holding Ltd.

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