SoftBank Vision Fund swings to profit on global tech rebound

TOKYO – SoftBank Group’s Vision Fund eked out its first profit in more than a year, thanks to a global tech rebound that helped lift the value of some of its investments.

The Vision Fund unit swung to a profit of 61 billion yen (S$574 million) in the quarter ended in June, compared with a 2.33 trillion yen loss for the same period a year ago. That helped SoftBank report a smaller group-wide net loss of 477.6 billion yen versus a 3.16 trillion yen loss in 2022, with earnings dragged down by paper losses on its stakes in Alibaba Group Holding, Deutsche Telekom and T-Mobile United States.

That is a reprieve for the Vision Fund unit, which lost a record US$30 billion (S$40.4 billion) last fiscal year. SoftBank invested billions of dollars in unprofitable start-ups from 2017, inflating valuations worldwide before they were punctured by China’s tech crackdown starting 2020 and the US Federal Reserve’s rate hikes in 2022.

The Nasdaq 100 index, a proxy for tech stock performance, rallied 15 per cent during the June quarter, capping its best ever first-half of a year. Hype over artificial intelligence (AI) 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 Mr Tomoaki Kawasaki, a senior analyst at Iwai Cosmo Securities. SoftBank founder Masayoshi Son’s recent comments that the Vision Fund will soon resume start-up investments are adding to such hopes, he said.

The Vision Fund unit invested US$1.6 billion in the quarter, a fraction of Mr Son’s spending during the division’s early years. Whether the chief executive will be able to go on the offensive and hunt for new deals hinges on the initial public offering of SoftBank’s Arm.

Arm, however, logged a quarterly loss of 9.5 billion yen on a 11 per cent decline in sales in dollar terms on a slowdown in semiconductor industry sales, SoftBank said.

The chip designer seeks to raise as much as US$10 billion in a market debut as soon as September at a valuation of between US$60 billion and US$70 billion. If successful, that would make Arm the largest tech 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 US equities and the Nasdaq index perform will be key, he said. BLOOMBERG