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'We created a monster,' SoftBank CEO Masayoshi Son reportedly said of WeWork

Business Insider Singapore logo Business Insider Singapore 5/11/2019 Yusuf Khan, Business Insider US
a close up of Masayoshi Son wearing a suit and tie: SoftBank CEO Masayoshi Son has come under fire after the WeWork debacle. © Provided by Business Insider Inc SoftBank CEO Masayoshi Son has come under fire after the WeWork debacle.
  • Masayoshi Son, CEO of Japanese mega-investor SoftBank, told colleagues that “we created a monster” in WeWork, the Financial Times reported.
  • SoftBank will on Wednesday impose stricter governance standards on dual-class share structures after the WeWork fiasco, the FT said.
  • SoftBank is expected to take a multibillion dollar writedown on WeWork, the FT said.  

Masayoshi Son, CEO of Japanese mega-investor SoftBank, told colleagues that “we created a monster” in WeWork after investing billions into the firm only to later bail it out, the Financial Times reported.

SoftBank last month bailed out the cash-strapped real estate firm to the tune of just over $8 billion, with an accelerated payment of $1.5 billion just to ensure the company didn’t run out of money. SoftBank being one of the company’s main backers, is now under scrutiny for the way it invests.

The FT also separately reported, citing unnamed sources, that SoftBank will on Wednesday impose stricter governance standards on dual-class share structures after the WeWork fiasco – an about-face for Son who the newspaper says is “known as a risk-addicted dealmaker.”

SoftBank is expected to take a multibillion dollar writedown on WeWork, the FT said.

Prior to the bailout, SoftBank had invested more than $10 billion in WeWork and the office-sharing firm was valued at $47 billion at its peak. The firm planned to IPO and backers dreamed of a valuation of more than $100 billion.

But intense scrutiny over WeWork’s governance and business model resulted in the firm indefinitely delaying its IPO, and its idiosyncratic cofounder Adam Neumann stepping down as CEO in September, followed by the bail out last month.

Son, the Financial Times cited a person close to him as saying, has been shaken by the ordeal. The Japanese magnate has said little publicly about WeWork since the funding deal, although he has said that he is “embarrassed” in general by SoftBank’s missteps.

“We created a monster,” Son told colleagues, according to the paper. And in reference to Neumann: “We gave him all the capital.”

This, along with Uber, which has lost more than a quarter in value since going public, and according to CNBC cost the Japanese firm $600 million so far, is leading to investors worrying about the real value of SoftBank’s ventures.

“If SoftBank says this is the value, how much of that should you believe?” the FT cited Kirk Boodry, a technology analyst at Redex Holdings who publishes on Smartkarma, a research platform, as saying.

WeWork and SoftBank did not immediately respond to a Business Insider request for comment.

Read the Financial Times’ report here.

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