SoftBank Group has reported an impressive 608.5 billion yen (3.96 billion dollars) profit on Vision Fund investment in its fiscal second quarter. This is a major uptick after the group returned to profitability the previous quarter.
SoftBank’s gains are attributed to the rising value of portfolio companies like Coupang Global, Didi Global and ByteDance as well as a successful IPO by Arm Holdings. SoftBank owns a stake in Arm Holdings that is close to 90%.
The Vision Fund has made a remarkable recovery after experiencing volatile performance and significant losses during previous quarters.
Vision Fund 1 values are boosted by e-commerce, ride-hailing and other factors
Vision Fund 1’s first fund was the primary factor in Vision Funds success. Its shares were valued higher on prominent investments.
Coupang (South Korean) and Didi Global, China’s ride-hailing giant, both saw their valuations rise.
Vision Fund 2 suffered a loss of 232.6 billion yen in the second-quarter, due to declines at companies like AutoStore in Norway and Symbotic in US, which provides automation technology.
SoftBank’s listing in September of Arm Holdings (a British designer of smartphone chips) has proven to be a great financial boost.
SoftBank has benefited from the performance of Arm’s stock since its IPO.
The AI industry continues to drive demand for the latest chip technology. This event is testament to Masayoshi Son’s long-term investment strategy.
Son is also reported to have positioned SoftBank so that it will invest $500,000,000 in OpenAI’s most recent funding round. This would cement the commitment of SoftBank towards AI.
Alibaba and T-Mobile drive investment gains
SoftBank’s investment portfolio saw a gain of 1.28 trillion yen in Alibaba stock and 566.2 million yen for T-Mobile.
The assets contributed to the group’s net sales increasing by 6%, reaching 1.77 trillion yen in the third quarter.
These recent gains, despite challenges in certain high-profile investment opportunities, are a reflection of a portfolio well-diversified that is able to benefit from international technology stocks as well as domestic markets.
Elliott Management’s pressure leads to 500 billion yen in share purchases
SoftBank is under pressure by activist investor Elliott Management. The company has been pushed to buyback shares in order to boost shareholder value.
SoftBank responded by announcing a 500-billion yen (3.25-billion dollar) share repurchase program, with the aim of buying back 6,8% shares.
By the end of its second quarter, Elliott had purchased shares totaling 153.8 billion Japanese yen. This aligns with Elliott’s goal to boost investor returns in the face of a stronger yen as well as volatile market conditions.
The summer saw significant market fluctuations in Japan due to yen’s rapid appreciation, and widespread selling of risk assets.
Barclays analysts suggest domestic volatility may continue in the future, particularly with Bank of Japan interest rate increases.
The BOJ may decide to adjust interest rates as soon as December 2024.
What drove this quarterly increase of $3.96 billion by SoftBank Vision Fund? This post may be updated as new information becomes available
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