By SoftBank Group reported a robust 608.5 billion yen ($3.96 billion) gain on its Vision Fund investments in the fiscal second quarter, marking a significant upswing after returning to profitability in the prior quarter.
The gains were driven by rising valuations in portfolio companies such as Coupang, Didi Global, and ByteDance, as well as the successful IPO of Arm Holdings, in which SoftBank holds a near-90% stake.
This marks an encouraging recovery for the Vision Fund, which experienced volatile performances and considerable losses in previous quarters.
E-commerce and ride-hailing boost Vision Fund 1 valuations
The primary contributor to Vision Fund’s recent success was its first fund, Vision Fund 1, which recorded higher share prices in prominent holdings.
Coupang, the South Korean e-commerce giant, saw a marked valuation uplift, as did Chinese ride-hailing leader Didi Global.
By contrast, Vision Fund 2 faced a 232.6 billion yen loss in the second quarter, reflecting declines in companies such as AutoStore, a robotics firm in Norway, and Symbotic, a US-based automation technology provider.
SoftBank’s September listing of Arm Holdings, a British smartphone chip designer, has been a financial boon.
Arm’s shares have performed well since the IPO, substantially benefiting SoftBank’s portfolio.
This event is a testament to Masayoshi Son’s long-term strategy in AI and semiconductor investments, as the AI sector continues to fuel demand for advanced chip technology.
Son has also reportedly positioned SoftBank to invest $500 million in OpenAI’s latest funding round, cementing the conglomerate’s commitment to AI.
Alibaba and T-Mobile sales drive broader investment gains
Across its investment portfolio, SoftBank gained 1.28 trillion yen on Alibaba shares and 566.2 billion yen on T-Mobile stock.
These assets have contributed significantly to the group’s 6% rise in net sales, which reached 1.77 trillion yen for the quarter.
Despite challenges with certain high-profile investments, these recent gains are reflective of a well-diversified portfolio that benefits from both international tech stocks and domestic markets.
Elliott Management pressure prompts 500 billion yen share buyback
SoftBank has faced pressure from activist investor Elliott Management, which has pushed the company to buy back shares to increase shareholder value.
In response, SoftBank announced a 500 billion yen ($3.25 billion) repurchase plan, aiming to buy back 6.8% of outstanding shares.
As of the second quarter’s end, it had repurchased shares worth 153.8 billion yen, aligning with Elliott’s vision for bolstering investor returns amid a strengthening yen and volatile global market conditions.
During the summer, Japanese markets experienced significant fluctuations due to rapid yen appreciation and a widespread sell-off in risk assets.
Analysts at Barclays suggest that domestic volatility could continue, especially with the Bank of Japan’s anticipated interest rate hikes.
Wages in Japan’s service sector have seen growth, a key indicator for the BOJ, which may adjust rates further as early as December 2024.
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