SoftBank reports $37 billion Vision Fund profit on Coupang

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“It’s clearly validation of Masa’s thesis,” Navneet Govil, Vision Fund’s chief financial officer, told Reuters in an interview, referring to Masayoshi Son, the company founder and CEO.

Group net profit was 4.99 trillion yen in the year ended March. That compares with an 962 billion yen loss a year earlier after teetering tech bets https://www.reuters.com/article/softbank-group-results-idINKBN22U0KM depressed the value of its portfolio.

Market enthusiasm for tech stocks drove the public listing of SoftBank-backed e-commerce firm Coupang and used-car trading platform Auto1 Group and the rising share price of ride-hailing firm Uber (NYSE:UBER) during the quarter.

Much of Vision Fund’s gain is on paper with the value of the portfolio locked up in the stock market amid concern over frothy valuations and a boom in special purpose acquisition vehicles (SPACs) which has drawn regulatory scrutiny.

The total fair value of the first $100 billion Vision Fund and the smaller second fund was $154 billion at the end of March, with SoftBank distributing $22.3 billion to limited partners.

SoftBank has hiked its committed capital in the second fund to $30 billion from $10 billion, reflecting the breadth of investment opportunities, Govil said.

Two of SoftBank’s highest profile bets, space sharing firm WeWork and ride-hailing firm Grab, have outlined plans to list via SPAC mergers, with Vision Fund reportedly in talks https://www.reuters.com/technology/softbank-backed-spac-take-mapbox-public-2-bln-deal-sky-news-2021-04-23 to use its own such vehicle to list portfolio company Mapbox.

SoftBank has exhausted much of the $2.5 trillion buyback programme launched last year, with shares hitting two-decade highs in March before slipping in line with weakness in U.S. tech stocks.

Investors’ attention is focused on whether other portfolio companies like ride-hailing firm Didi and TikTok owner Bytedance can engineer their own listings and on any further price weakness which could crimp profit in the current financial year.

Those companies have strong revenue growth, healthy market share and a clear path to profitability, Govil said.

The group’s trading arm, SB Northstar, is expanding dealmaking this week leading a $1 billion investment in acquisitive e-commerce firm THG.

($1 = 108.8600 yen)