The We Company (WE) isn’t SoftBank’s only dud. SoftBank has been a principal shareholder on two US IPOs this year, both of which are now underwater. This week’s IPO of Chinese software platform OneConnect Financial Technology (OCFT) would continue the streak.
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OneConnect’s proposed valuation is $4.9 billion, well below the $7.5 billion valuation given when SoftBank invested $470 million in 2018. At the proposed $13 midpoint, SoftBank would be taking a 42% per-share cut from its last round of investment.
Earlier this year, ridesharing giant Uber (UBER) went public at a fully diluted $82 billion market cap in an IPO down round that represented an 8% per-share discount to its previous round. SoftBank was the company’s largest pre-IPO investor. The company came to market in the wake of competitor Lyft’s (LYFT) poor debut, broke issue on the first day of trading, and has yet to recover.
Another SoftBank investment, infectious disease biotech Vir Biotechnology (VIR) went public at an 11% per-share premium to its previous private round for a market cap of $2.3 billion. Like Uber, Vir broke issue on its first day (-30%) and hasn’t recovered.
| 2019 SoftBank-backed IPOs* | |||
|---|---|---|---|
| Company | Last Round Price |
IPO Price |
Return from IPO at 12/6 |
| Uber (UBER) | $48.77 | $45.00 | -38% |
| Vir Biotechnology (VIR) | $18.00 | $20.00 | -37% |
| OneConnect Financial Technology (OCFT) | $22.50 | $13.00 | -- |
*2019 US IPOs where SoftBank is a principal shareholder (>5%).
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Through its $100 billion Vision Fund, SoftBank has built a portfolio of more than 70 companies across seven industries, making big long-term bets in spaces with large market opportunities. The company has faced criticism that the sheer size of the fund has led to a lack of pricing discipline and inflated valuations.
SoftBank also backed the year’s major direct listing, Slack (WORK); the company began trading at a 223% premium to its last round less than a year earlier, but SoftBank’s gain on that round is now 89%. Additionally, the Japanese conglomerate owns a minority stake in 10X Genomics (TXG), its sole IPO outperformer this year.
