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SoftBank's Vision Fund continues bounce back by posting ¥844 billion profit in Q3


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Image: SoftBank Group

SoftBank Group’s CEO Masayoshi Son has labelled his company a “golden goose” in response to its Vision Funds bouncing back from a record loss last year to post profit of ¥844 billion during the third quarter.

According to Son, the ¥1 trillion year-on-year turnaround was due to sectors such as e-commerce, entertainment, healthcare, education, and food delivery benefitting from the accelerated adoption of digital services that arose during the pandemic.

As of 31 December 2020, Vision Fund 1’s 82 investments have increased their value by 18% to $90 billion, compared with their purchase price of $76.3 billion.

Unrealised valuation gain for Vision Fund 1 as of the end of the third quarter totalled ¥1.5 trillion for listed portfolio companies, with DoorDash and Uber being the primary reasons for this uptick. The two companies have provided unrealised valuation gains of $8.3 billion and $3.6 billion, respectively, as of December.

Vision Fund 2, meanwhile, currently holds 26 investments with fair value amounting to $9.3 billion. The second fund’s investments had initially cost $4.3 billion.

Moving forward, Son during the results presentation said he expected SoftBank’s funds to produce between 10 and 20 initial public offerings a year.

“We’ve finally entered the harvest phase,” Son said while presenting an image of a golden goose laying golden eggs, which were meant to represent SoftBank’s IPOs and exits.

SoftBank Group’s Japanese telco, SoftBank, also reported being in the black by posting almost ¥213 billion and ¥1.37 trillion in profit and revenue, respectively.

For the third quarter, the telco’s consumer segment continued to carry the lion’s share of sales by posting ¥697 billion in revenue. Meanwhile, its enterprise and Yahoo segments chipped in ¥153 billion and ¥270 billion, respectively.

The telco also revealed that its smartphone subscriber base increased by over 1.2 million across a six-month period to December. Its broadband service, SoftBank Hikari, also gained an additional 450,000 subscribers over that same period.

In total, the gains from SoftBank Group’s various segments culminated in net profit of ¥1.17 trillion from ¥1.38 trillion in sales during the third quarter.

SoftBank’s profit marks a shift from the year prior, when the company revealed significant losses from WeWork and the COVID-19 pandemic, which forced the company to sell assets.

At the time, Son said he expected 15 companies in Vision Fund 1 to go bankrupt as the company tightened its financial belt.

Looking at the sale and monetisation of those assets, the company has amassed ¥5.6 trillion over the six months from April to September 2020 from partially selling its T-Mobile, Alibaba, and SoftBank Corp shares.

Providing an update on how the ¥5.6 trillion would be used, Son said the company would seek to make new investments for sustainable growth and return profits to shareholders.

He added that while share repurchases of up to ¥2 trillion were originally intended to be executed across 12 months from March last year, uncertainty in market trends has meant that the repurchases may not be completed by the end of March 2021, as originally scheduled.

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