Son Jeong-ui "Preparing 88 Trillion Won in Cash for Worst-Case Scenario"... Warning Against 'Vaccine Optimism'

"State of emergency may occur within 2-3 months"... Suggests aggressive investment
"Will invest in unicorn companies"... Still attached to WeWork
Also interpreted as securing funds for SoftBank's voluntary delisting

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] SoftBank Chairman Masayoshi Son mentioned the possibility of an emergency situation due to the resurgence of the novel coronavirus infection (COVID-19). He stated that a global emergency could occur within the next three months and that he has secured 88 trillion won in cash to prepare for it. His strategy is attracting attention as it is interpreted as a completely different judgment from the market sentiment, which has become optimistic recently due to expectations for COVID-19 vaccine development.

On the 17th (local time), Chairman Son appeared at the DealBook Conference hosted by The New York Times (NYT) via video call and said, "In preparation for the worst-case scenario that could occur if the world is locked down again amid the second wave of COVID-19, we sold assets and secured $80 billion in cash." He added, "The original goal was to secure about $40 billion, but we doubled the liquidity to prepare for an emergency."

His remarks contrast with the overall optimism spreading in the market following news of COVID-19 vaccine development by U.S. pharmaceutical companies Moderna and Pfizer. Although Chairman Son avoided specific comments about the worst-case scenario, he repeatedly emphasized that it is quite possible. He warned, "If you recall the bankruptcy of Lehman Brothers in 2008, anything can happen in the current situation. Of course, medical vaccines will come out, but no one can guarantee what will happen in just the next two to three months."

Chairman Son's warning is interpreted as concern over the serious second wave of COVID-19 spreading mainly in the U.S. and Europe and the resumption of lockdown measures by various countries. According to CNN, 13 U.S. states have currently resumed lockdown measures, and major European countries such as France, the United Kingdom, Spain, and Italy have entered strong lockdown measures similar to those in April, including curfews. There are concerns that if this prolongs, the economic shock could be much worse than during the first wave.

Based on the cash secured, Chairman Son stated that if an emergency occurs later, he will continue aggressive investments in unicorns (unlisted startups valued at over $1 billion) that are expected to have high future value. He emphasized, "If the market plunges due to the impact of COVID-19, we will be able to purchase undervalued value stocks and assets additionally. If an opportunity arises to invest in AI (artificial intelligence) unicorn companies, we will aggressively invest at any time."

Regarding WeWork, a shared office company known as a representative unicorn investment failure case of Chairman Son, he said he still has affection for it. Chairman Son said, "Adam Neumann, the former CEO of WeWork, is a very wise and talented person and will succeed someday. However, investing too much money in WeWork was a mistake." Previously, after meeting CEO Neumann in 2017, Chairman Son invested $9.7 billion through SoftBank's Vision Fund, valuing WeWork at $47 billion. However, WeWork faced a bankruptcy crisis after failing to go public on the New York Stock Exchange last year. SoftBank recorded a net loss of 700.2 billion yen (about 7.4456 trillion won) in the third quarter of last year, absorbing WeWork's losses.

Some interpret Chairman Son's cash securing as preparation for SoftBank's voluntary delisting rather than a COVID-19 crisis. Bloomberg reported that Chairman Son wants to convert SoftBank into a private company to increase control and that about $100 billion in cash will be needed to buy shares for the transition to a private company.

Chairman Son is known to want to escape management interference from Elliott Management, which became a major shareholder by purchasing 3% of SoftBank shares in February this year. Since becoming a SoftBank shareholder, Elliott has pointed out investment losses caused by Chairman Son's unilateral management and has demanded improvements in corporate governance, such as strengthening the independence and transparency of the board of directors, while checking Chairman Son.

This content was produced with the assistance of AI translation services.