Details of the fund’s structure and investment mandate are sparse. But its size and the speed with which Misra raised this capital is surprising in an era where liquidity is tight from central banks’ quantitative tapering and investors are jittery.
Prompting even more head-scratching is that Misra does not have a stellar investment track record. As CEO of SoftBank Investment Advisors, which managed the first Vision Fund, he oversaw a titanic operation that reported only $30.8 billion investment gains as of March-end. Saddled by poor investment decisions from WeWork Inc. to Greensill Bank AG, the performance of the $100 billion venture fund, which launched in 2017, is far from impressive in an investment world that aims for at least 20% returns annually.
Misra is reportedly recruiting his old teammates, including Akshay Naheta, a former colleague at Deutsche as well as SoftBank. For years, the two pushed SoftBank founder Masayoshi Son to let them set up an internal multibillion-dollar hedge fund to do complex public market deals. When SB Northstar was established in 2020 — led by Naheta who oversaw stock investments — it quickly earned SoftBank the “Nasdaq whale” nickname. But with tech stocks crashing, Northstar hammered SoftBank with 670 billion yen ($4.8 billion) in losses for the last fiscal year ending March, while Son personally took a $2.4 billion hit. In other words, Misra and his long-time colleagues do not have much of a track record in public markets, either. SoftBank declined Bloomberg Opinion’s request to make Misra available for an interview.
So what do coveted and deep-pocketed investors such as Mubadala see in him?
One possible explanation is that Misra is interesting, and his unique lens can yield unexpected returns. As rising macro risks and volatility fuel increases in pairwise equity correlations, it is getting harder for traditional stock pickers to outperform. Some top-tier investors are seeking fresh ideas outside the crowded sphere of public market fundamentals and closer to private, opaque markets.
Look at Misra’s background, and it’s apparent that vanilla investments were never his thing. Rather, he remains a true credit trader: Originate risk on his balance sheet, but shift it quickly to another investor at better prices, which covers fees and other costs. In doing so, he keeps the upside, while removing the principle risk from his own portfolio.
Misra’s Wirecard play was an excellent example. In April 2019, SoftBank facilitated a 900 million euro ($912.6 million) convertible bond for the Germany digital payments firm, a refreshing stamp of approval for a company that had faced scrutiny over its accounting for years. This convertible bond was first sold to Mubadala and a few SoftBank executives, including Misra and Naheta, at generous prices and then immediately re-packaged and re-sold by Credit Suisse Group AG to a broader group of investors at substantially less attractive terms. Mubadala et al ended up getting some Wirecard stakes — risk-free and for nothing — from this so-called “structured equity” trade.
In other words, companies like Mubadala probably never expected fundamental research from Misra, whose bread-and-butter strategy has always been short term. And who knows, perhaps his clever trading ideas will work in this environment, where volatile macro factors ruin vanilla investment strategies.
Misra’s impressive fundraising should thus serve as a lesson for hedge fund managers. These days, you don’t have to be good, but you do need to be interesting.
More From Bloomberg Opinion:
• Wirecard Is a Wild Card, Even Without SoftBank Money: Shuli Ren
• Venture Capital Has a Battery Blind Spot: Anjani Trivedi
• Tiger and Sequoia Take SoftBank to the Cleaners: Shuli Ren
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. A former investment banker, she was a markets reporter for Barron’s. She is a CFA charterholder.
Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. Previously, she was a reporter for the Wall Street Journal.
More stories like this are available on bloomberg.com/opinion