Masayoshi Son said he will begin to make personal investments alongside SoftBank Group’s Vision Fund, a controversial step that could lead to conflicts of interest as his company backs technology start-ups.
The Japanese billionaire made the disclosure as his company reported earnings, explaining he will begin to co-invest in Vision Fund 2, an investment vehicle where SoftBank has been the sole source of capital.
Mr Son can invest up to $2.6 billion and will own 17.25 per cent of the equity. He will have a similar arrangement with SoftBank’s Latin America fund.
Business leaders tend to avoid mixing their personal financial interests with corporate responsibilities. Governance experts caution there can be conflicts of interest, especially when the company has public shareholders.
If, for example, the chief executive has a personal stake in a start-up, it may create extra pressure for the Vision Fund to ensure the company does not go under.
“Investors were holding their breath for more buybacks, so this is not the reveal we were hoping to see,” said Kirk Boodry, an analyst at Redex Research in Tokyo. “This raises corporate governance concerns.”
SoftBank shares slid as much as 2.7 per cent in Tokyo trading.
Mr Son’s mingling of personal interests with those of his company has drawn fire before. When SoftBank set up a unit called SB Northstar to trade public stocks and derivatives, Mr Son took a 33 per cent personal stake in the operation.
Analysts and fund managers questioned why the billionaire would decide on such a structure given the potential for confusion and conflicts.
On Tuesday, Mr Son defended the latest decision during a press conference. He said SoftBank’s board approved the structure, while he recused himself from the vote.
“Because I believe, I want the management to share in the investment risk,” he said. “In good times and bad, one thing doesn’t change – my conviction that AI [artificial intelligence] revolution will absolutely continue for the next 10 to 20 years.”
The board approval was not reassuring to everyone.
“The board may have signed off on this but are there any directors who could stand up to SoftBank founder and owner Son? There is a possibility of a conflict there,” said Koji Hirai, president of mergers and acquisitions advisory company Assist.
Mr Son said he had planned for top management to contribute to the first Vision Fund. While the programme was approved by the board, it was never put into action as the Vision Fund slipped into the red and SoftBank’s share price crashed.
The board may have signed off on this but are there any directors who could stand up to SoftBank founder and owner Son?
Koji Hirai,
president of Assist
“I became poor,” Mr Son joked, referring to his personal borrowing using his company’s stock as collateral.
The founder explained that venture capital firm partners typically receive a 20 per cent to 30 per cent performance fee, but the Vision Fund does not have similar incentives. The co-investment is supposed to provide financial benefits but it will include a downside.
“I will take risks all by myself initially,” Mr Son said. “Then I will distribute to other people in the management. We want this to remain as the culture of SoftBank.”
The Japanese company has stoked concerns in the past that it does not have sufficient governance and compliance infrastructure in place as it evolves into an investment holding company.
SoftBank director Yuko Kawamoto resigned from the company’s board after one year in June, writing a highly unusual departing memo that highlighted the company’s need for better internal checks and governance.
“SBG needs to formulate a form of governance that allows Masa to fully demonstrate his talents, which can then be integrated into shareholders’ value,” she wrote.
SoftBank’s announcements on Tuesday are unlikely to help revive the company’s share price, which has dropped by about a third from its peak in March. Investors have been looking for the company to buy back more of its own shares but Mr Son declined to commit to such a move while reporting a sharp drop in profit at the Vision Fund business.
“We are surprised and disappointed,” Jefferies analyst Atul Goyal wrote in a research note. “The stock may continue to underperform without any catalyst in sight.”
The Vision Fund’s income in the three months ended June 30 was 235.6 billion yen ($2.1bn), down from a record 2.27 trillion yen profit in the previous quarter. The Tokyo-based company had net income of 761.5bn yen in the period and did not release operating profit figures.
Mr Son’s investment business had a strong run as a global surge in technology shares boosted the Vision Fund’s profit to new records for three consecutive quarters in the past fiscal year.
Since then, some of the company’s biggest hits have surrendered gains, with South Korean e-commerce company Coupang falling by about 20 per cent. Now, a technology sector crackdown by Chinese regulators is threatening to push the Vision Fund’s earnings into the red in the current quarter.
SoftBank reported a $4.3bn loss in Coupang’s valuation. The company contributed $24.5bn to the Vision Fund's profit in the previous quarter.
Gains from Didi Global, whose debut at the end of the quarter was one of the largest US offerings of the past decade, were the main reason the business remained profitable. Didi contributed $3.2bn to the bottom line.
But as soon as the books for the quarter were closed, China’s cyber space regulator launched an offensive on the country’s technology sector, sending SoftBank’s China portfolio into a tailspin.
Didi, which was removed from app stores on orders from Beijing, and Uber-like lorry start-up Full Truck Alliance are both down more than 30 per cent since the end of June.
Zhangmen Education, part of China’s private education industry that the government said was “hijacked by capital”, lost more than 60 per cent.
“The problem with the Vision Fund SoftBank is that their largest investments so far have been middling to poor – WeWork, Uber, Didi,” said Mr Boodry. “Those three alone are a quarter of the fund. That is a huge performance hurdle for the rest of the fund to overcome.”
In the press conference, Mr Son defended the company’s track record and its long-term investment success. He said SoftBank’s funds have $88.2bn in unrealised fair value, along with $18.3bn in realised value.
Mr Son said his investments were not concentrated in any single geographic area, explaining China made up only 23 per cent of the fund’s total value and accounted for 11 per cent of new investments in the past quarter.
He also suggested investors should wait it out, giving new regulations there one to two years to be finalised.
He conceded most of the company’s portfolio of more than 300 companies leverage artificial intelligence, but said there is little doubt that technology will be central to the future.
“If AI fails, SoftBank would fail, that is a risk,” Mr Son said.
SoftBank pared back its holdings in technology stocks, a potential warning sign for other investors. It no longer lists Facebook, Microsoft, Alphabet or Netflix among its investments. The disclosure was as of June 30.
Killing of Qassem Suleimani
Sly%20Cooper%20and%20the%20Thievius%20Raccoonus
%3Cp%3E%3Cstrong%3EDeveloper%3A%3C%2Fstrong%3E%20Sucker%20Punch%20Productions%3Cbr%3E%3Cstrong%3EPublisher%3A%3C%2Fstrong%3E%20Sony%20Computer%20Entertainment%3Cbr%3E%3Cstrong%3EConsole%3A%3C%2Fstrong%3E%20PlayStation%202%20to%205%3Cbr%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%205%2F5%3C%2Fp%3E%0A
Personalities on the Plate: The Lives and Minds of Animals We Eat
Barbara J King, University of Chicago Press
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
Results
%3Cp%3E%0D%3Cstrong%3EElite%20men%3C%2Fstrong%3E%0D%3Cbr%3E1.%20Amare%20Hailemichael%20Samson%20(ERI)%202%3A07%3A10%0D%3Cbr%3E2.%20Leornard%20Barsoton%20(KEN)%202%3A09%3A37%0D%3Cbr%3E3.%20Ilham%20Ozbilan%20(TUR)%202%3A10%3A16%0D%3Cbr%3E4.%20Gideon%20Chepkonga%20(KEN)%202%3A11%3A17%0D%3Cbr%3E5.%20Isaac%20Timoi%20(KEN)%202%3A11%3A34%0D%3Cbr%3E%3Cstrong%3EElite%20women%3C%2Fstrong%3E%0D%3Cbr%3E1.%20Brigid%20Kosgei%20(KEN)%202%3A19%3A15%0D%3Cbr%3E2.%20Hawi%20Feysa%20Gejia%20(ETH)%202%3A24%3A03%0D%3Cbr%3E3.%20Sintayehu%20Dessi%20(ETH)%202%3A25%3A36%0D%3Cbr%3E4.%20Aurelia%20Kiptui%20(KEN)%202%3A28%3A59%0D%3Cbr%3E5.%20Emily%20Kipchumba%20(KEN)%202%3A29%3A52%3C%2Fp%3E%0A
UAE%20ILT20
%3Cp%3E%3Cstrong%3EMarquee%20players%3A%3C%2Fstrong%3E%3Cbr%3EMoeen%20Ali%2C%20Andre%20Russell%2C%20Dawid%20Malan%2C%20Wanindu%20Hasiranga%2C%20Sunil%20Narine%2C%20Evin%20Lewis%2C%20Colin%20Munro%2C%20Fabien%20Allen%2C%20Sam%20Billings%2C%20Tom%20Curran%2C%20Alex%20Hales%2C%20Dushmantha%20Chameera%2C%20Shimron%20Hetmyer%2C%20Akeal%20Hosein%2C%20Chris%20Jordan%2C%20Tom%20Banton%2C%20Sandeep%20Lamichhane%2C%20Chris%20Lynn%2C%20Rovman%20Powell%2C%20Bhanuka%20Rajapaksa%2C%20Mujeeb%20Ul%20Rahman%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EInternational%20players%3A%3C%2Fstrong%3E%3C%2Fp%3E%0A%3Cp%3ELahiru%20Kumara%2C%20Seekugge%20Prassanna%2C%20Charith%20Asalanka%2C%20Colin%20Ingram%2C%20Paul%20Stirling%2C%20Kennar%20Lewis%2C%20Ali%20Khan%2C%20Brandon%20Glover%2C%20Ravi%20Rampaul%2C%20Raymon%20Reifer%2C%20Isuru%20Udana%2C%20Blessing%20Muzarabani%2C%20Niroshan%20Dickwella%2C%20Hazaratullah%20Zazai%2C%20Frederick%20Klassen%2C%20Sikandar%20Raja%2C%20George%20Munsey%2C%20Dan%20Lawrence%2C%20Dominic%20Drakes%2C%20Jamie%20Overton%2C%20Liam%20Dawson%2C%20David%20Wiese%2C%20Qais%20Ahmed%2C%20Richard%20Gleeson%2C%20James%20Vince%2C%20Noor%20Ahmed%2C%20Rahmanullah%20Gurbaz%2C%20Navin%20Ul%20Haq%2C%20Sherfane%20Rutherford%2C%20Saqib%20Mahmood%2C%20Ben%20Duckett%2C%20Benny%20Howell%2C%20Ruben%20Trumpelman%3C%2Fp%3E%0A
RESULT
Esperance de Tunis 1 Guadalajara 1
(Esperance won 6-5 on penalties)
Esperance: Belaili 38’
Guadalajara: Sandoval 5’
Pharaoh's curse
British aristocrat Lord Carnarvon, who funded the expedition to find the Tutankhamun tomb, died in a Cairo hotel four months after the crypt was opened.
He had been in poor health for many years after a car crash, and a mosquito bite made worse by a shaving cut led to blood poisoning and pneumonia.
Reports at the time said Lord Carnarvon suffered from “pain as the inflammation affected the nasal passages and eyes”.
Decades later, scientists contended he had died of aspergillosis after inhaling spores of the fungus aspergillus in the tomb, which can lie dormant for months. The fact several others who entered were also found dead withiin a short time led to the myth of the curse.
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
What is dialysis?
Dialysis is a way of cleaning your blood when your kidneys fail and can no longer do the job.
It gets rid of your body's wastes, extra salt and water, and helps to control your blood pressure. The main cause of kidney failure is diabetes and hypertension.
There are two kinds of dialysis — haemodialysis and peritoneal.
In haemodialysis, blood is pumped out of your body to an artificial kidney machine that filter your blood and returns it to your body by tubes.
In peritoneal dialysis, the inside lining of your own belly acts as a natural filter. Wastes are taken out by means of a cleansing fluid which is washed in and out of your belly in cycles.
It isn’t an option for everyone but if eligible, can be done at home by the patient or caregiver. This, as opposed to home haemodialysis, is covered by insurance in the UAE.
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
More from Neighbourhood Watch:
The burning issue
The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE.
Read part four: an affection for classic cars lives on
Read part three: the age of the electric vehicle begins
Read part one: how cars came to the UAE
More from Neighbourhood Watch:
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%3Cp%3EHigh%20fever%20(40%C2%B0C%2F104%C2%B0F)%3Cbr%3ESevere%20headache%3Cbr%3EPain%20behind%20the%20eyes%3Cbr%3EMuscle%20and%20joint%20pains%3Cbr%3ENausea%3Cbr%3EVomiting%3Cbr%3ESwollen%20glands%3Cbr%3ERash%26nbsp%3B%3C%2Fp%3E%0A
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
More on animal trafficking
BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
MATCH INFO
Manchester City 3 (Silva 8' &15, Foden 33')
Birmginahm City 0
Man of the match Bernado Silva (Manchester City)
The view from The National
SHADOWS%20AND%20LIGHT%3A%20THE%20EXTRAORDINARY%20LIFE%20OF%20JAMES%20MCBEY
%3Cp%3EAuthor%3A%20Alasdair%20Soussi%3C%2Fp%3E%0A%3Cp%3EPages%3A%20300%3C%2Fp%3E%0A%3Cp%3EPublisher%3A%20Scotland%20Street%20Press%3C%2Fp%3E%0A%3Cp%3EAvailable%3A%20December%201%3C%2Fp%3E%0A
Eyasses squad
Charlie Preston (captain) – goal shooter/ goalkeeper (Dubai College)
Arushi Holt (vice-captain) – wing defence / centre (Jumeriah English Speaking School)
Olivia Petricola (vice-captain) – centre / wing attack (Dubai English Speaking College)
Isabel Affley – goalkeeper / goal defence (Dubai English Speaking College)
Jemma Eley – goal attack / wing attack (Dubai College)
Alana Farrell-Morton – centre / wing / defence / wing attack (Nord Anglia International School)
Molly Fuller – goal attack / wing attack (Dubai College)
Caitlin Gowdy – goal defence / wing defence (Dubai English Speaking College)
Noorulain Hussain – goal defence / wing defence (Dubai College)
Zahra Hussain-Gillani – goal defence / goalkeeper (British School Al Khubairat)
Claire Janssen – goal shooter / goal attack (Jumeriah English Speaking School)
Eliza Petricola – wing attack / centre (Dubai English Speaking College)
Emergency phone numbers in the UAE
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
Killing of Qassem Suleimani
The specs
Engine: 3.8-litre twin-turbo flat-six
Power: 650hp at 6,750rpm
Torque: 800Nm from 2,500-4,000rpm
Transmission: 8-speed dual-clutch auto
Fuel consumption: 11.12L/100km
Price: From Dh796,600
On sale: now
AI traffic lights to ease congestion at seven points to Sheikh Zayed bin Sultan Street
The seven points are:
Shakhbout bin Sultan Street
Dhafeer Street
Hadbat Al Ghubainah Street (outbound)
Salama bint Butti Street
Al Dhafra Street
Rabdan Street
Umm Yifina Street exit (inbound)
BUNDESLIGA FIXTURES
Friday (UAE kick-off times)
Cologne v Hoffenheim (11.30pm)
Saturday
Hertha Berlin v RB Leipzig (6.30pm)
Schalke v Fortuna Dusseldof (6.30pm)
Mainz v Union Berlin (6.30pm)
Paderborn v Augsburg (6.30pm)
Bayern Munich v Borussia Dortmund (9.30pm)
Sunday
Borussia Monchengladbach v Werder Bremen (4.30pm)
Wolfsburg v Bayer Leverkusen (6.30pm)
SC Freiburg v Eintracht Frankfurt (9on)
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
'Peninsula'
Stars: Gang Dong-won, Lee Jung-hyun, Lee Ra
Director: Yeon Sang-ho
Rating: 2/5
EA Sports FC 26
Publisher: EA Sports
Consoles: PC, PlayStation 4/5, Xbox Series X/S
Rating: 3/5
The Lost Letters of William Woolf
Helen Cullen, Graydon House
German intelligence warnings
- 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
- 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
- 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250
Source: Federal Office for the Protection of the Constitution
The more serious side of specialty coffee
While the taste of beans and freshness of roast is paramount to the specialty coffee scene, so is sustainability and workers’ rights.
The bulk of genuine specialty coffee companies aim to improve on these elements in every stage of production via direct relationships with farmers. For instance, Mokha 1450 on Al Wasl Road strives to work predominantly with women-owned and -operated coffee organisations, including female farmers in the Sabree mountains of Yemen.
Because, as the boutique’s owner, Garfield Kerr, points out: “women represent over 90 per cent of the coffee value chain, but are woefully underrepresented in less than 10 per cent of ownership and management throughout the global coffee industry.”
One of the UAE’s largest suppliers of green (meaning not-yet-roasted) beans, Raw Coffee, is a founding member of the Partnership of Gender Equity, which aims to empower female coffee farmers and harvesters.
Also, globally, many companies have found the perfect way to recycle old coffee grounds: they create the perfect fertile soil in which to grow mushrooms.
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
PROFILE OF SWVL
Started: April 2017
Founders: Mostafa Kandil, Ahmed Sabbah and Mahmoud Nouh
Based: Cairo, Egypt
Sector: transport
Size: 450 employees
Investment: approximately $80 million
Investors include: Dubai’s Beco Capital, US’s Endeavor Catalyst, China’s MSA, Egypt’s Sawari Ventures, Sweden’s Vostok New Ventures, Property Finder CEO Michael Lahyani
