SoftBank unit posts $7.6bn profit in second quarter as value of its start-ups grows

SoftBank Group’s Vision Fund unit posted a record ¥784.4 billion ($7.6bn) profit in the second quarter, bolstered by a recovery in some start-up valuations and a blockbuster public offering by a Chinese property start-up.

The unit reported a net profit of ¥ 627.5bn in the three months ended September 30, rebounding from a ¥612bn loss a year earlier, SoftBank said yesterday. It did not release operating profit figures.

Masayoshi Son’s investment business is recovering from a record loss in the past financial year as a global rally in technology shares lifted the value of SoftBank’s stakes in publicly traded companies such as Uber and improved the prospects for start-ups in its portfolio.

However, the losses derailed Mr Son’s plans to raise outside money for a follow-up to the original Vision Fund, which disbursed most of its $100bn in capital in under three years.

The Vision Fund 2 is much more modest in scale because it is financed entirely by SoftBank. It has also adopted a more cautious investment approach.

Atul Goyal, a senior analyst at Jefferies, said before the announcement of the results that the Vision 2 Fund was showing more discipline.

“But at the end of the day, we need to see some exits and those are probably still years down the road,” he said.

One success in the second fund’s portfolio is KE Holdings, a Chinese online property platform that went public in August.

Shares in the company have surged since then and boosted the value of SoftBank’s original $1.35bn to more than $6.38bn as of September 30, according to Bloomberg calculations.

SoftBank said the Vision Fund 2 had an unrealised gain of ¥537.2bn on KE Holdings. The unit set a new profit record in the quarter, beating the previous high in the third quarter of the 2018 financial year, before Uber’s disappointing initial public offering and the implosion of WeWork’s proposed listing the following year.

After shares plunged in March with the coronavirus outbreak, SoftBank unveiled plans to sell off assets worth ¥4.5 trillion to reduce debt and fund buybacks.

The sell-off included part of its interest in Alibaba Group Holding, T-Mobile US and SoftBank, the Japan telecoms unit.

SoftBank also announced a deal to sell its chip designer Arm to Nvidia for $40bn.

“For long-term SoftBank investors, quarterly earnings are of little import these days,” Mr Goyal said. “The only thing that is material is Alibaba’s stock price and the buy-back.”