SoftBank Group¡¯s Vision Fund has eked out its first profit in more than a year, thanks to a global tech rebound that has helped lift the value of some of its investments.
The Vision Fund unit swung to a profit of ?61 billion ($426 million) in the quarter ended June, compared with a ?2.33 trillion loss for the same period a year ago. That helped SoftBank report a smaller group-wide net loss of ?477.6 billion versus a ?3.16 trillion loss last year, with earnings dragged down by paper losses on its stakes in Alibaba Group Holding, Deutsche Telekom and T-Mobile U.S.
That¡¯s a reprieve for the Vision Fund unit, which lost a record $30 billion last fiscal year. SoftBank invested billions of dollars in unprofitable startups from 2017, inflating valuations worldwide before they were punctured by China¡¯s technology crackdown starting 2020 and the U.S. Federal Reserve¡¯s rate hikes last year.
The Nasdaq 100 index, a proxy for tech stock performance, rallied 15% during the June quarter, capping its best ever first-half of a year. Hype over artificial intelligence and easing concern over higher interest rates have bolstered SoftBank¡¯s investments in companies including Grab Holdings, Coupang and Roivant Sciences.
¡°I think you can anticipate the trend to continue,¡± said Tomoaki Kawasaki, a senior analyst at Iwai Cosmo Securities. SoftBank founder Masayoshi Son¡¯s recent comments that the Vision Fund will soon resume startup investments are adding to such hopes, he said.
The Vision Fund unit invested $1.6 billion in the quarter, a fraction of Son¡¯s spending during the division¡¯s early years. Whether the CEO will be able to go on the offensive again and hunt for new deals hinges on the initial public offering of SoftBank¡¯s Arm.
Arm, however, has logged a quarterly loss of ?9.5 billion on a 11% decline in sales in dollar terms, on a slowdown in semiconductor industry sales, SoftBank said.
The chip designer seeks to raise as much as $10 billion in a market debut as soon as September at a valuation of between $60 billion and $70 billion. If successful, that would make Arm the largest technology debut on record after Alibaba Group Holding and Meta Platforms.
¡°Once Arm goes public, investors would be able to bet on two profit streams: one from Arm and other AI- and chip-related investments, and another from the expansion of Vision Fund investments,¡± Iwai Cosmo¡¯s Kawasaki said. How U.S. equities and the Nasdaq index perform will be key, he added.
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