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A $1.4 Billion Loss for Softbank from Indian Investments

Japan’s Softbank Group Corp said it had recognised a special loss of over ¥114 million ($1.4 billion) relating to investments made by the Tokyo-headquartered investor, citing, in particular, its investment in troubled e-commerce marketplace Snapdeal.

The Masayoshi Son-led telecommunications giant said, on Wednesday, the special loss of ¥114,059 million represented impairments of its investments in subsidiaries and associates, including, that Starfish I Pte Ltd.

Starfish I is an intermediate holding company, which owns preferred shares in Jasper Infotech, which owns and operates Snapdeal. According to an official statement released by the company, “(The) highly competitive e-commerce market in India has made a trend of the company’s business performance lower than initially anticipated.”

According to the telecommunications giant, Snapdeal’s weaker performance had led to “a material decrease in net asset value of Starfish I Pte Ltd as of March 31, 2017, and therefore SBG impaired the carrying amount of its shares in the company, to the amount equivalent to its net asset value.”

The company also said that the the changes in the fair value of Jasper Infotech have been recorded on quarterly basis as gain or loss on financial instruments at fair value through profit or loss on the income statements.

“Therefore, there is no impact from the above-mentioned loss on valuation of shares of subsidiaries and associates on the consolidated financial results,” the official statement said.

The statement comes on the same day as the Tokyo-headquartered company saw it report a 13% jump in full-year operating profit, to ¥1.03 trillion for the 12 months ending March 31, which was driven primarily by cost cuts and an improved performance by its US-based wireless business Sprint Corp.

SoftBank, which is the largest private investor in India’s startup ecosystem, having pumped in over $2 billion till date, has been attempting to engineer a sale of Snapdeal to rival e-commerce company Flipkart for an anticipated $1 billion. The telecom-to-internet conglomerate, has invested about $900 million in Snapdeal so far.

In February earlier this year, SoftBank had recorded a $350 million loss on its investments in both, Snapdeal and ride-hailing app Ola, two of its most high-profile bets in the country till date.

The narrowing of the loss recorded by the company then, came on the back of the numbers announced by it in November last year, when it stated that it had recorded a loss of over $550 million for the six-month period ending September 30, primarily driven by preferred stock held by it in both companies, and which was largely driven by appreciation of the Japanese Yen against the local currency.

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