SoftBank Rides Recovery on Vision Fund Performance

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SoftBank Group Corp’s net profit went up to $11.1 billion (¥1.17 trillion) in the third quarter on the back of stock rallies and asset sales, which has helped the conglomerate to make a dramatic recovery in fortunes.

Net profit for October-December is more than 21 times higher than the ¥55 billion reported a year earlier, SoftBank said. It surpassed analysts’ forecasts of a net profit of ¥98.5bn.

SoftBank’s Vision Fund recorded its best performance since its launch in 2017. The Japanese tech conglomerate’s two Vision Funds reported a $13 billion gain in the value of their investments during the three months to December, helped by the pandemic-induced boost in holdings of ride-hailing group Uber and DoorDash, the recently listed food delivery group. At the end of December, the fund’s $7.7bn investment in Uber was worth $11.3bn, while its $680m DoorDash investment was valued at $9bn.  SoftBank has stakes in some of Silicon Valley’s hottest startups through its $100 billion Vision Fund.

SoftBank Group Masayoshi Son

Masayoshi Son, Chief Executive Officer, SoftBank Group (Image Credit: SoftBank Group)

The Masayoshi Son-led group has seen a turbulent 12 months during which it sold many assets alongside aggressive purchases of US equity derivatives using its new cash pile. 

“Investment is rhythm,” Son said, showing a presentation slide of a goose laying golden eggs to the melody of Tchaikovsky’s The Nutcracker March. “It’s going to be a gold rush as the Vision Fund I enters the harvest phase,” he added, saying he expects about 10 to 20 of start-ups backed by the two funds to go public each year. 

Among the 131 companies the Vision Funds have invested in, 15 have listed so far. Navneet Govil, the Vision Fund’s chief financial officer, told the Financial Times that the strong performance of its Saudi-backed $100bn fund and its smaller fund was the result of its asset restructuring plan which freed capital and the extra low interests available in the present market, which helped boost performance. 

“We believe it’s going to continue,” Govil said, adding that several other IPOs were lined up this year. 

Government stimulus packages have helped bolster stock markets, to SoftBank’s benefit, said Masahiko Ishino, an analyst at Tokai Tokyo Research Institute.

The conglomerate “took full advantage of monetary easing”, he said before the results were released.

South Korean e-commerce group Coupang and Chinese ride-hailing company Didi Chuxing are among the Vision Fund investments expected to go public this year.  

In contrast to the VisionFund, SoftBank’s “SB Northstar”, the trading unit set up to play the market in listed tech stocks, reported losses of $2.7bn for the October to December quarter, bringing total losses to $5.5bn since September.

Its $22 billion investment in US big tech stocks, including Amazon, Facebook and Microsoft, also saw losses.

Shares in SoftBank have risen nearly 240 percent since March of last year. But the canceling of Alibaba’s $37 billion IPO by the Chinese government has cast a shadow over its turnaround performance in this quarter. SoftBank has a 25 percent holding in Alibaba and the Chinese group still accounts for nearly 60 percent of the total value of SoftBank’s holdings. “That company [Alibaba], its valuation and the huge cushion of asset value it represented had become the most solid, dependable bit of SoftBank after the mobile business was separated, and suddenly it doesn’t feel so solid,” said one investor in SoftBank based outside of Japan.

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The post SoftBank Rides Recovery on Vision Fund Performance appeared first on Industry Leaders Magazine.

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