Japanese investment giant SoftBank Group unveiled their losses and has reported a valuation loss of JPY 160,419 million ($1.4 billion) on its investments in cash-strapped e-commerce firm Snapdeal and transport hailing major Ola for the fiscal year ended March 2017.
“This mainly resulted from recording a loss as the amount of changes in the fair value of the company’s financial instruments at FVTPL (fair value through profit and loss) from the previous fiscal year-end to the fiscal year-end,” SoftBank said in an earnings report for the fiscal ended 31 March.
SoftBank is known to be one of the most prolific, high-profile investors in the Indian startup ecosystem. The Japanese telecom giant has driven funds into some of the biggest homegrown startups, like Ola, Snapdeal, Housing.com, and InMobi among other. While it has aggressively pumped capital into these ventures, the returns have been largely been a no-show. And the same has been reiterated in the company’s annual report for the fiscal year ended in March 2017.
In the said annual report, the Japanese giant has yet again announced that it has written down the value of its investments by a hefty 160.42 billion yen (approx $1.41 billion). This total amounts to the losses incurred only by the company’s two prominent investments in the Indian market, which includes Ola parent ANI Technologies Pvt. Ltd and Snapdeal parent Jasper Infotech Pvt. Ltd. Through a statement released in the filing, SoftBank said, “The highly competitive e-commerce market in India has made a trend of the company’s business performance lower than initially anticipated.”
SoftBank has not written off the investments all at once but has been adopting a similar approach each quarter. As for the individual number, the Japanese giant has written off nearly $1 billion in the value of Snapdeal and the value of Ola shares has been reduced by about $400 million. But, it now leading the charge of acting as the mediator for several merger and acquisition deals across town.
Over the past couple months, SoftBank’s primary investment in India, Snapdeal has been flailing and has now almost been crushed under pressure from its e-commerce competitors. It has not only been able to secure fresh capital due to an internal strife among its early and largest investors but also failed to witness growth. Thus, the homegrown e-tailer has already trimmed its workforce by over 600 employees, cleared out massive offices, and the co-founders have given up their compensations.