SoftBank’s Vision Funds Make Remarkable Turnaround with Quarterly Profit
SoftBank’s Vision Funds have marked a significant milestone by reporting a quarterly profit after six consecutive quarters of losses. The latest quarter saw a profit of 134.7 billion Japanese yen (approximately $939 million), largely attributed to gains from investments in semiconductor pioneer Arm and payments platform PayPay.
Arm, poised for a potential IPO valuation of $60 to $70 billion, could offer a substantial liquidity boost to SoftBank, aiding its recovery and potentially revitalizing the IPO market. However, challenges lie ahead as Arm recently experienced an 11% sales decline to $641 million due to diminished chip demand in the recovering tech sector.
Meanwhile, SoftBank faces additional hurdles, including a lawsuit against the CEO of IRL, a social media startup accused of inflating user growth data to investors.
The Vision Funds, which have grappled with substantial losses since 2017, have taken steps to rebound. Despite incurring a cumulative loss on 72% of its portfolio companies ($56.5 billion), SoftBank has managed to offset this with gains from investments, leaving a $7.5 billion deficit. The firm strategically divested stakes in Chinese ecommerce giant Alibaba to enhance liquidity amidst shifting tech valuations.
Signs of recovery are evident as the Vision Funds cautiously re-enter the investment arena. The last quarter witnessed $1.8 billion allocated to new investments, particularly in artificial intelligence (AI) enterprises. SoftBank Group CFO Yoshimitsu Goto emphasized the balanced approach to resuming investment activities during an earnings call with shareholders, prioritizing prudent decision-making.
This resurgence underscores SoftBank’s resilient strategy in navigating challenges and seizing opportunities in the ever-evolving tech landscape. As the Vision Funds move forward, their success in reversing losses serves as a testament to adaptable investment tactics and strategic portfolio management.