Uber Shares Drop as Softbank Plans to Sell Shares to Cover Didi and Other Losses

Philip Pacheco | AFP via Getty Images
  • Investors have pushed down Didi shares on concerns that the Chinese government was planning to impose fines on the company.
  • Now SoftBank, one of Didi's largest investors, is taking action.

SoftBank is selling about one-third of its stake in ride-hailing company Uber, in part to cover losses on its investment in Chinese ride-hailing company Didi, two people familiar with the matter told CNBC. It's planning to sell 45 million shares, which will have a 30-day lockup.

Uber shares fell 5% in extended trading following the report.

The value of Uber's own Didi stake declined $2 billion last week following the June debut of Didi's American depositary shares on the New York Stock Exchange, as China reportedly planned fines and other punishments against the company amidst a broader crackdown on U.S. listed Chinese companies.

SoftBank has lost about $4 billion on its Didi position in total, CNBC's Deirdre Bosa reported. It's also suffered from a decline in valuation of Alibaba, the botched Ant Group IPO, and paused plans for a ByteDance listing. In addition, Softbank's Masayoshi Son has increasingly been playing in public markets with its SB Northstar unit.

The news comes one week after Uber stock rose slightly after the company's trucking unit announced plans to acquire shipping software company Transplace from TPG Capital for around $2.25 billion.

Didi shares have fallen 37% from their $14.14 closing price on the stock's first day of trading, June 30. Over the same period Uber shares are down about 8%.

SoftBank's own shares have also tumbled since the Didi U.S. initial public offering. The SoftBank Vision Fund owned 21.5% of Didi following its U.S. listing.

SoftBank invested in Uber in 2018. In 2019 SoftBank Vision Fund invested another $333 million in Uber. As recently as March 31 Uber referred to SoftBank as "a large stockholder."

Many people called SoftBank's Uber equity purchase a failed investment, SoftBank CEO Masayoshi Son told analysts on a conference call in February, saying it was paying expensive money to a bad company.

"However," he said, "as a matter of fact, as you can see that we have already made something close to ¥500 billion gain from Uber."

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