SoftBank reports surge in Q3 profit as value of Vision Fund assets climbs

The Vision Fund held 82 investments at the end of the third quarter with a fair value of $90bn

People walk by a SoftBank shop in Tokyo. Japanese telecommunications and technology conglomerate on Monday reported $11bn profit for the October-December quarter. AP Photo

SoftBank Group third quarter net profit swelled more than 21 times as asset sales, a rise in technology stocks and a turnaround in the fortunes of its Vision Fund boosted income.

Net profit for the quarter ending December 31 surged to ¥1.17 trillion ($11.1 billion), beating an estimate of ¥171bn by four analysts polled by Refinitiv.

The telecoms and technology investment giant recorded a ¥844bn profit at its Vision Fund unit in the three months to December, swinging from a loss a year earlier. Gains on investments in companies such as Uber and the initial public offering of DoorDash increased the value of assets of the $100bn investment vehicle.

The Vision Fund, which invests across a broad spectrum of technology firms, held 82 investments at the end of the third quarter with a fair value of $90bn. The purchase prices of these assets was $76.3bn. Since its inception, the investment vehicle has made a “cumulative gross gain" of $20.4bn.

A second fund, Vision Fund 2, has made 26 investments to date at a cost of $4.3bn, which were valued at $9.3bn at the end of the last quarter.

The figures demonstrate a significant swing in fortunes for SoftBank from a year earlier when the firm, controlled by Masayoshi Son, had to sell assets worth ¥4.5tn including part of its holdings in US T-Mobile and Chinese e-commerce giant Alibaba to pay off debt and buy back its shares. The company also announced plans to sell UK chip designer Arm to Nvidia for $40bn.

In a presentation to investors, Mr Son touted the company's successes, saying SoftBank is like a goose that lays golden eggs as 15 companies from its Vision Fund have listed stocks on public exchanges so far.

“Since the Vision Fund launched, the number of golden eggs is in accelerating mode,” Bloomberg quoted him as saying during the presentation. “We are finally in the harvesting stage.”

The Vision Fund – backed by Abu Dhabi's Mubadala Investment Company and Saudi Arabia's Public Investment Fund, who have invested $83bn out of $98.6bn of committed capital into the vehicle – may see up to seven more companies from its portfolio go public by the end of 2021, its chief executive Rajeev Misra told The National in November.

Mr Misra said the Vision Fund plans to boost its investment in artificial intelligence and technology companies.

The rally in technology stocks after the initial sell-off in the first quarter of 2020, as the Covid-19 pandemic gripped the world, also helped Mr Son to turn around Softbank's fortunes.

SoftBank held a cumulative $22bn of listed stocks at the end of December, including a $7.39bn holding in Amazon, $1.1bn in Microsoft, $3.28bn in Facebook and $1.38bn in Alphabet. It also held $580 million of shares in Netflix and $667m in salesforce.com.

The investment firm has also joined the race to launch blank cheque firms. It plans to launch two more special purpose acquisition companies (SPACs), as it looks to raise as much as $630m, SoftBank said on Monday.

The announcement comes less than two months after it filed to create a $525m blank cheque company, which received strong investor demand. SPACs look to merge with private companies, letting them become publicly traded firms while avoiding some of the uncertainty of an initial public offering.

More than $35bn has been raised by the 117 SPACs that have gone public on US exchanges this year, according to data compiled by Bloomberg.