SoftBank’s Vision Fund, the brainchild of company founder Masayoshi Son, has faced a number of headwinds, including a slump in tech stocks due to rising interest rates, a difficult Chinese market and geopolitics.
Kentaro Takahash | Bloomberg | beautiful images
SoftBank posted a 724.3 billion yen ($4.6 billion) profit from its Vision Fund in the fiscal year ended March, the first time the leading tech investment arm has sunk to a loss since then. from 2021.
For the full fiscal year, SoftBank’s Vision Fund segment posted a profit of 128.2 billion yen, turning profitable after a loss of 4.3 trillion yen the previous year.
The Vision Fund’s recovery helped SoftBank Group post a profit in the fiscal fourth quarter ended March.
The Vision Fund has been buoyed by the value of some of SoftBank’s highest-profile investments, including TikTok owner ByteDance and the US food delivery company. DoorDash. However, SoftBank has been hit by some of its other investments, such as Chinese ride-hailing company DiDi as well as office-sharing company. We workwhich filed for Chapter 11 bankruptcy protection last year.
The Vision Fund’s profits are largely due to chip designer Arm’s initial public offering last year.
The Japanese company said profits related to the IPO of Arm, a subsidiary of Softbank, were not reported in the “consolidated statement of profit or loss.” Excluding profits related to Vision Fund’s investments in subsidiaries, the technology investment arm lost 167.3 billion yen.
Still, there are signs that a recovery is underway for SoftBank, which has been hit hard by bad bets on several tech companies as well as volatile markets.
Here’s how SoftBank did in the March quarter compared to LSEG estimates:
- Net revenue: 1.75 trillion yen ($11.3 billion) versus 1.84 trillion yen expected.
- Net profit: 231.1 billion yen vs. expected loss of 71.64 billion yen.
Still for the entire year, SoftBank reported a total loss of 227.6 billion yen, but this figure was lower than the previous fiscal year’s loss of 970.1 billion yen.
‘Core’ arm to AI conversion
SoftBank’s flagship technology investment fund, the Vision Fund, struggled in the fiscal year ending March 2023, reported a record loss of about 32 billion USD amid a slump in tech stock prices and some corporate bets in China going sour.
However, in the June quarter of last year, the Vision Fund announced First investment increased for five consecutive quarterssignaling the early stages of recovery.
SoftBank founder Masayoshi Son has flagged 2023 that the company will Switch to “violation” modefrom defensive mode and exit the cautious approach to start investing more.
SoftBank Chief Financial Officer Yoshimitsu Goto said last quarter that SoftBank had moved from “Alibaba to an AI-focused portfolio.”
The tech group grew into one of Japan’s largest companies thanks to Son’s early bet on Chinese e-commerce giant Alibaba in 2000, which boomed in the coming years.
The company was Cut shares at Alibabaand senior executives, including Son and Goto, expressed excitement about artificial intelligence technology and SoftBank’s potential to invest in companies in the sector.
Arm has become a central part of SoftBank’s portfolio. At the end of March, Arm accounted for 47% of assets held by SoftBank, compared with just 10% in March 2020, Goto said Monday. Alibaba accounts for 0% of assets held compared to 48% in the same period.
“Arms are core to our AI transformation,” Goto said.
Correction: A previous version of this article misstated the full-year gain for SoftBank’s Vision Fund.
