Japan’s Softbank has announced a $550 million (around Rs 3,700 crore) write down in its Indian investment, mainly in cab aggregator Ola (ANI Technologies) and ecommerce company Snapdeal (Jasper Infotech).
A write down is a reduction in the estimated value of an asset.
In its half year regulatory filing the Tokyo-based company said, “Gain or loss arising from financial instruments at FVTPL (fair value through profit or loss) comprises mainly changes in fair value of preferred stock investment including embedded derivatives, such as ANI Technologies Pvt. Ltd and Jasper Infotech Private Limited in India, designated as financial assets at FVTPL.”
For the six month period ending September 2016, Sofbank wrote down 58.1 billion Japanese Yen (around $550 million) to enable a more fair reflection of its investment value or FVTPL in the Indian companies. Nearly half of this write down is attributed to appreciation of Japanese Yen against other currencies.
For Ola, the write down comes at a time when it is look for fresh funding to continue to maintain its market leadership against its rival Uber.
It was recently reported that Ola is looking raise fresh fund of $300-500 million from among others, its existing investor Softbank. Ola has so far raised $1.23 billion in eight rounds from 20 investors, including Softbank, Matrix Partners, Accel Partners and individual investors. The company is in talks with most of the venture capital firms that have invested in the company earlier. A Bloomberg report said Softbank will lead the new round as well.
Softbank made its maiden investment of $210 million in Ola and $627 million in Snapdeal in October 2014. In May this year Softbank CEO Masayoshi Son had said that his company’s investment in India could cross $10 billion over the next 5-10 years from around $2 billion now.
Earlier this year, Flipkart saw its valuation fall from $15 billion to around $9 billion when five investors Morgan Stanley, T Rowe Price, Valic, Vanguard and Fidelity reported write downs their investments in the Bengaluru based company.