TOKYO— SoftBank Group Corp. said a decline in the value of many holdings in its investment portfolio sent its profit lower during the latest quarter, showing that headwinds are rising for the world’s biggest tech investor.
The Japanese conglomerate, best known for its $100 billion Vision Fund, said net profit was ¥761.5 billion, equivalent to $6.9 billion, for the quarter ended June. That was lower than the year-ago figure and a fraction of the record-setting January-March quarter, when the company rode booming stock markets to multibillion-dollar gains on its investments.
The value of some of those investments sank during the April-June quarter, including Coupang Inc., a Korean e-commerce company that listed in March, and Auto1 Group, a German online used-car dealer that went public in February. In the latest quarter, the Vision Fund and its successor lost the equivalent of more than $6 billion collectively on the value of nine holdings, including Coupang, as the frenzy over some of tech’s hot listings cooled slightly. Those companies had helped generate tens of billions of dollars in largely paper gains for the two funds.
Even after accounting for those declines in value, the two funds still logged the equivalent of about $2.6 billion in investment gains in the latest quarter.
SoftBank’s own shares closed Tuesday at ¥6,831, up slightly for the day but down more than 35% from the year’s peak.
What may be the worst news for SoftBank’s investment portfolio is still unfolding and hasn’t yet been fully reflected in the company’s earnings: a crackdown by Beijing on some of China’s most high-profile tech firms. Those include e-commerce giant Alibaba Group Holding Ltd. , SoftBank’s biggest asset holding, whose value has fallen since regulators accused it earlier this year of anticompetitive practices and levied a record fine.
Also, stock of Chinese ride-sharing leader Didi Global Inc., a top Vision Fund holding, is trading one-third lower than its June initial public offering price after regulators punished it for what they described as data-security problems.
A Citibank report estimated Chinese tech companies accounted for 44% of the value of SoftBank’s investments as of the end of March, mostly owing to the Alibaba stake. They also make up a significant portion of the investments that the Vision Funds were counting on to generate future profits.
Full Truck Alliance Co. , a Chinese Uber-like app for trucks also known as Manbang, is trading around 30% lower than its June IPO price after Chinese regulators launched a cybersecurity probe against it similar to the one it is conducting against Didi. ByteDance Ltd., owner of the popular TikTok short-video app, earlier this year postponed indefinitely what was expected to be a blockbuster listing after regulators signaled it needed to deal with data-security issues too. SoftBank is an investor in both ByteDance and Full Truck Alliance.
“A lot of the gains that looked possible now look less likely,” said David Gibson, an analyst at Astris Advisory Japan. He estimated that as much as $30 billion in expected gains from initial public offerings set to come this year may have evaporated.
Write to Phred Dvorak at phred.dvorak@wsj.com
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