Once a key lieutenant to SoftBank’s billionaire founder Masayoshi Son, Misra struck out on his own last summer, while also agreeing to stay on part-time to oversee SoftBank’s first Vision Fund, which held a 13% stake in WeWork as of late March.

The debt deal involving Misra’s new fund and his previous full-time employer puts the former Deutsche Bank executive, considered one of the most prolific debt deal makers on the planet, on two sides of the same deal.

It is one of several transactions at SoftBank in recent years that personally involved executives or their relatives. Son, for instance, owes SoftBank around $5 billion for soured personal investments he made alongside the company. In April, SoftBank said it would sell an Asia-focused venture-capital fund to a company led by Son’s brother.

In 2019, Misra and other SoftBank executives personally invested in a debt package to now-defunct payments firm
Wirecard
that was arranged by SoftBank.

SoftBank says in its corporate governance report that related-party transactions require review and approvals. The specific policy for the recent deal couldn’t be learned. Misra is employed part-time by a subsidiary of SoftBank, which doesn’t publicly disclose its related-party policy.

Public companies are generally required to disclose related-party deals given the potential for conflicts. If WeWork would need to restructure its debt again in the future, that could require a renegotiation between SoftBank—where Misra still works—and Misra’s firm.

Disclosures as part of SoftBank’s first-quarter earnings last week show that in recent months it wrote down the value of its debt tied to WeWork by $1.6 billion. 

Based on WeWork’s slumping share price, SoftBank’s total losses on its investment in the company stand at more than $12 billion since 2017, one of the worst startup investments of all time. On Tuesday, WeWork said that its chief executive officer since 2020,

Sandeep Mathrani,
was stepping down and would be replaced by a board member until a permanent replacement was found. 

SoftBank initially bet on the company in 2017 after Son was taken by then-CEO

Adam Neumann
and his view that WeWork was a tech startup with extraordinary potential. Son made it a top priority and directed billions of dollars into the company to fuel a rapid global expansion. 

Losses ballooned and investors balked at WeWork’s attempted public listing in 2019, in part because of concerns over Neumann’s management style and his related-party transactions with the company. 

To salvage its initial investment, SoftBank put in more money in 2019 and bought most of the company. In all, SoftBank has invested more than $10.9 billion in equity and committed to back over $3 billion in debt to the company, its filings show.

More recently, the investment has been hit by the pandemic-driven work-from-home movement. Overall office demand fell, leading to higher-than-expected losses and growing concerns by shareholders the company might run out of money. WeWork’s stock is down over 95% since it agreed to list publicly in 2021 by merging with a special-purpose acquisition company. 

This year, WeWork turned to SoftBank and other lenders to rework its more than $3.6 billion in debt while also looking for outside money. SoftBank, through its two Vision Funds, owns nearly 70% of WeWork, and holds much of its debt.

In addition to the deal with Misra’s firm, WeWork struck deals with SoftBank and other lenders to reduce its debts—converting some loans to shares in the company, and pushing the maturity dates of others. SoftBank said that as of March 31—before the restructuring was fully completed—it expected $1.6 billion in losses tied to its WeWork debt. 

Misra’s firm in February committed $470 million in debt, which effectively refinanced and expanded an existing $350 million slice of junior debt, according to WeWork securities filings. SoftBank also agreed to the deal. The debt is a floating-rate letter of credit with an interest rate of over 14% as of March.

SoftBank Chief Financial Officer

Yoshimitsu Goto
told reporters last week that while WeWork was struggling, “We still expect them to turn around the business.” 

Misra, known as an adroit financial engineer, has a long history of helping Son out of jams. While at
Deutsche Bank,
he arranged $16 billion of debt for SoftBank to acquire one of Japan’s largest cellphone carriers. He later guided SoftBank’s restructuring and eventual sale of U.S. telecommunications carrier Sprint and advised Son when SoftBank’s stock cratered during the pandemic.

The return of Misra to WeWork comes years after he lobbied against SoftBank’s initial investment, given that he saw WeWork as more of a real-estate company, The Wall Street Journal has reported.

It was one of the first large investments made by the fund, which under Misra went on to invest about $90 billion in companies including Uber and DoorDash as well as numerous high-profile flops.

Misra stepped back in mid-2022. He quickly secured commitments for his new venture from multiple Abu Dhabi-aligned investment funds overseen by Sheikh Tahnoun bin Zayed Al Nahyan, who is the brother of the president of the United Arab Emirates. 

The fund had $6.8 billion in assets under management as of the end of 2022, according to annual investment adviser filings made with the U.S. Securities and Exchange Commission. The fund said in the filings that potential investment areas include high-yielding debt investments and equity. 

Write to Eliot Brown at [email protected]