The technology conglomerate SoftBank Group Corp reported a leap in profits at its first $100 billion fund and said that its second Vision Fund might begin investing in various businesses as soon as next month. This announcement was made by the founder and Chief Executive Masayoshi Son.
Funding round participants including Microsoft Corp and Apple Inc pledged to invest $108 billion for the Vision Fund 2 (VF2), SoftBank said last week, but it did not provide any breakup of the investments.
Son said on Wednesday after SoftBank reported operating earnings for the first-quarter at much higher levels that the market consensus estimates, that “high interest” in taking stakes were being shown by the anchor investors from the first fund – Saudi Arabia and Abu Dhabi. Negotiations between the parties are undergoing currently on the possibility.
Very robust performance at the first Vision Fund aided the overall great performance. There was a 66 per cent year on year jump the operating profit of the first Vision Fund to reach 397.6 billion yen ($3.74 billion) for the quarter ended June.
The $38 billion contribution to the second fund is being planned to be funded by SoftBank through the funds that it would get from the first Vision Fund (VF1) as well as other assets.
“Vision Fund 2 could start investing pretty soon, next month or the month after,” Son said.
The aim of SoftBank in creating and developing and the second fund is to maintain its oversized industry presence after its first fund had made most of its total investments in fast growing startups that were at a mature stage of business lifecycle such as the ride hailing company Uber and the parent of WeWork, The We Company.
“Many Japanese companies are sailing using an old map. Using our new map we are looking for a new continent,” Son said.
In the investments made by the first fund has seen growth with the growth of companies such as hotel chain OYO, workplace messaging app Slack and delivery service Doordash which has bloated its $66.3 billion investment in 81 such startups to a current value of $82.2 billion.
However, the fund is yet to realize the actual profits because most of its gains are still on paper and in the first quarter, it had unrealized gains worth 604 billion yen. That gain was however offset by the unrealized losses of 195 billion yen because of drop in value of investments that it had made in firms like ride-hailing firm Uber whose current stock price is lower than its IPO price.
Increasing volatility has hit the earnings of SoftBank because of the shift of the business policy of Son to focus more on startups with shifting valuations away from the more predictable earnings assured by the telecom industry.
The group raked in a quarterly operating profit of 688.8 billion yen, outstripping a 336 billion yen estimate from five analysts compiled by Refinitiv. However that was 3.7 per cent lower than what the company had racked in within the same period a year ago.
(Adapted from WSJ.com)