SoftBank Group Corporation’s miseries in China and its outlook towards the Indian economy perfectly embody China’s imminent collapse and India’s emergence as the new driver of the global economy. After facing gigantic losses in China owing to the Chinese government’s business-subverting policies, SoftBank is now rushing to India, seeking to stash investments in much safer and profit-yielding stocks. The Japanese multinational conglomerate is now planning to raise its stakes in India and has expressed its intentions to invest money ranging from $5 billion to $10 billion in Indian start-ups by the end of the next year.
Softbank keen to raise stakes in India:
“If we find the right companies, we could invest $5 billion to $10 billion in 2022,” said Rajeev Misra, chief executive officer of SoftBank Investment Advisers. Japan Times has reported how investments in India have so far yielded better-than-expected results for the company. Moreover, stringent regulatory measures in China have made foreign investors warier about their bets in China, thus making them look for better options overseas. Needless to say, India is emerging as the top destination for investors fleeing China.
With SoftBank’s Vision Fund reporting a record loss of ¥825.1 billion ($7.2 billion) for the quarter ended in September, the Japanese company is increasingly hunting for investment opportunities in India. In 2021, the company has so far invested $3 billion in India. The group has its money parked in various Indian start-ups including ride-hailing giant Ola and e-commerce player Flipkart. SoftBank also invested in digital payments pioneer Paytm, which is poised to raise $2.5 billion in its initial public offering. Also, SoftBank-backed OYO Hotels and Homes is looking ahead to launching its IPO worth a whopping Rs 8,430 crore.
SoftBank Group and other investors see rosy days ahead for Indian financial markets in this decade. Hence, foreign investors are now increasingly getting keen to raise their stakes in Indian markets as soon as possible. Their urgency is augmented by sweeping changes in Chinese financial markets, where private firms are finding it perilous to carry out what they are supposed to do—Business activities.
SoftBank’s sinking fortunes in the Chinese markets:
The ongoing crackdown in China recently resulted in SoftBank group reporting a quarterly loss as its Vision Fund unit took a $10 billion hit from a decline in the value of its portfolio companies. Masayoshi Son, founder and CEO of SoftBank said Monday that the conglomerate is stuck in a “big winter snowstorm.” SoftBank on Monday posted a loss of 397 billion yen ($3.5 billion) for the July-to-September quarter. Son said that the company’s net asset value fell by 6 trillion yen ($54.3 billion) to $187 billion. In one word, Masayoshi Son summed up the reason for his company’s record losses, and said, “Alibaba”.
SoftBank’s investments in China are turning sour and becoming liabilities. It just so happens that SoftBank’s major investments are in the Chinese tech sector, and this is among those areas of the Chinese economy which has been beaten black and blue by the Chinese Communist Party over the past year.
SoftBank sends a message to the world:
SoftBank seems to have learnt its lesson. It would be mad not to. After having suffered losses to the tune of several billion, any business will dissociate from the entity which is at the centre of the said losses. So, China is now a dark chapter in SoftBank’s history. On the contrary, India is SoftBank group’s bright spot, where its investments have accrued enormous profits for the company.
Hence, after signalling the world about not risking their money by investing in China, SoftBank group is now sending one more message to the world- If you have money, invest it in India.
