On Wednesday, SoftBank Group Corp reported a 4.03 trillion yen ($ 37 billion) vision fund unit profit in the fourth quarter by Coupang, making it among the world’s top-earning firms after a year of unprecedented losses.
The group’s net profit for the year ended March was 4.99 trillion yen ($ 45.88 billion), compared to $ 42.5 billion made by Warren Buffett’s Berkshire Hathaway in its last business year. Masayoshi Son, founder and CEO told a news conference, “This is not a result to make us puffed up with pride, I don’t want it to be a one-time thing”.
Softbank’s portfolio fell in value after teetering tech bets compared with a loss of 962 billion yen a year earlier. Navneet Govil, Vision Fund’s chief financial officer, told in an interview with Reuters, “It’s clearly validation of Masa’s thesis”.
Market enthusiasm for tech stocks led to a public listing of Softbank-backed e-commerce firm Coupang and rising share price of used-car trading platform Auto1 Group and ride-hailing firm Uber fired up during the quarter.
To maintain SoftBank’s position among the global corporate elite, Son will have to replicate that performance with other yet-to-be-listed companies in the Vision Fund portfolio. Son compares that to laying golden eggs.
According to Govil, ride-hailing firm Didi, TickTalk owner Bytedance and candidates for truck service platform Full Truck Alliance have strong revenue growth, healthy market share, and a clear path to profitability.
However, much of the benefit of the Vision Fund is on paper with the value of the portfolio locked up in the stock market amid concern over frothy valuations and a boom in special purpose acquisition vehicles (SPACs) which has drawn regulatory scrutiny.
At the end of March, the first $ 100 billion vision fund and the smaller second $ 10 billion funds had a total fair value of $ 154 billion, with SoftBank disbursing $ 22.3 billion to limited partners. Govil said SoftBank increased its committed capital to $ 30 billion in the second fund, reflecting the breadth of investment opportunities.
Softbank’s two largest profile bets, space-sharing company Wavecore and ride-healing firm Grab, plan to list through the SPAC merger, reportedly talks with Vision Fund to use its own vehicle to list portfolio company Mapbox.
SoftBank has completed a 2.5 trillion yen buyback program launched last year, which pushed the stock price to a two-decade high in March. The buyback comes at a time when the US Shares are sliding with weakness in tech stocks.