SoftBank’s Vision Fund posts $8 billion profit in 3rd quarter

SoftBank Group’s Vision Fund unit on Monday posted 844 billion yen ($8 billion) third quarter profit as Chief Executive Masayoshi Son hailed the bounce back of his investment portfolio.

The profit marks a visible change from a year earlier when high-profile misses such as the flopped IPO of office sharing firm WeWork and the COVID-19 pandemic forced Son to sell assets to stabilise his investing empire.

“Our vision never changed,” Son told a news conference in Tokyo after his company announced its latest results.

But with interest rates at rock bottom, an ebullient market is now driving tech stock gains and a turnaround at the Vision Fund unit.

Son returned to a favoured analogy - that SoftBank is a goose that lays golden eggs by backing fast-growing companies such as Alibaba.

“Golden eggs are not produced by chance,” Son said.

Softbank-backed firms home selling platform Opendoor and food delivery app operator Doordash went public during the quarter.

Softbank said unrealised gains in Doordash amounted to $10.7 billion.

Almost half of the first Vision Fund’s portfolio, which includes a stake in Uber Technologies, was exited or listed at the end of December, offering liquidity to fund backers that include the sovereign wealth funds of Saudi Arabia and Abu Dhabi.

The $100 billion Vision Fund’s 82 investments were valued at $90 billion, compared with their purchase price of $76.3 billion. The fund has also recorded $20.4 billion in gross gains since inception.

Vision Fund 2’s 26 investments were valued at $9.3 billion compared with their purchase price of $4.3 billion.

The fund’s portfolio companies held 28 funding rounds during 2020 with almost all led by investors other that SoftBank, reflecting the appetite for technology startups.

“You wouldn’t say Vision Fund is laying rotten eggs,” Son said.

Softbank’s trading unit SB Northstar disclosed stakes in listed tech stocks including Taiwan Semiconductor Manufacturing Co worth $22 billion at the end of December.

It recorded a 169.8 billion yen loss on its investments during the quarter.

During the third quarter, Softbank Group’s net profit ballooned more than 20 times to 1.17 trillion yen ($11.09 billion).

SoftBank Group Corp recorded an 844 billion yen ($8 billion) profit at its Vision Fund unit in the three months to Dec. 31 versus a loss a year ago as it gained from investments in Uber Technologies and other companies.

The earnings mark a sea change from a year earlier when high profile misses such as the flopped IPO of office sharing firm WeWork and the COVID-19 pandemic forced CEO Masayoshi Son to sell down assets to stabilise his investing empire.

With interest rates at rock bottom, an ebullient market is driving tech stock gains and turnaround at the Vision Fund unit. During the quarter Softbank-backed food delivery app operator Doordash and home selling platform Opendoor went public.

Almost half of the first Vision Fund’s portfolio was exited or listed at the end of December, offering liquidity to the fund whose backers include the sovereign wealth funds of Saudi Arabia and Abu Dhabi.

The $100 billion Vision Fund’s 82 investments were valued at $90 billion, compared with their purchase price of $76.3 billion. The fund has also recorded $20.4 billion in gross gains since inception.

Vision Fund 2’s 26 investments were valued at $9.3 billion compared with their purchase price of $4.3 billion. Softbank’s trading unit SB Northstar disclosed stakes in listed tech stocks including Taiwan Semiconductor Manufacturing Co worth $22 billion at the end of December.

SoftBank Group on Monday said it will receive a $4 billion dividend from its UK subsidiary, SoftBank Group Capital Limited. A spokesperson said the transaction is part of the group’s cash-management policy.

SGCL is a holding company that manages some of SoftBank’s overseas investments. It is a separate entity from the more high-profile Vision Fund, which is backed by the sovereign wealth funds of Saudi Arabia and the United Arab Emirates.

SGCL sold some of its holdings over the past year, such as shares in US telecommunications company T-Mobile and US robot maker Boston Dynamics. It also owns shares in Arm, the UK chip designer that SoftBank plans to sell to US chipmaker Nvidia.

The sale is under regulatory review. Some analysts have expressed concern over SoftBank’s ability to generate cash after it sold a chunk of its shares in Japanese telecoms unit SoftBank Corp, which was the group’s cash cow.

The dividend payout from SGCL is an indicator that its investment business has also generated significant profits for the group.