By Sam Nussey
TOKYO (Reuters) – SoftBank Group Corp’s Vision Fund unit on Tuesday posted a 236 billion yen ($2.14 billion) profit in the first quarter after gains from listing portfolio companies were offset by falling shares in firms like e-retailer Coupang Inc.
The Japanese conglomerate posted record annual profit in May with executives pointing to further upside from Vision Fund investments such as Chinese ride-hailing firm Didi Global Inc and “Uber for trucks” startup Full Truck Alliance Co Ltd.
Those companies listed in New York during the quarter but Chinese regulatory action has subsequently hammered valuations, underscoring SoftBank’s China risk even as the group seeks to reduce dependence on its largest asset, a stake in Chinese e-commerce giant Alibaba Group Holding Ltd.
While the crackdown has affected returns expectations, “our broader thesis in China is unchanged: It’s still a large, growing and compelling economic opportunity,” said Vision Fund Chief Financial Officer Navneet Govil.
The turmoil is clouding the outlook for the group, whose shares have slipped a third from two-decade highs in March amid the completion of a record 2.5 trillion yen buyback. Shares closed up 0.9% ahead of earnings.
“Having a large public portfolio introduces volatility but at the same time it allows us to continue to monetise in a very disciplined manner,” said Govil.
More than two-thirds of the portfolio of the first $100 billion Vision Fund is listed or exited. SoftBank has distributed $27 billion to its limited partners since inception.
Further upside will come from listings by Indian payments firm Paytm and insurance aggregator Policybazaar as well as Southeast Asian ridehailer Grab, which is due go public via a blank-cheque company merger, Govil said.
SoftBank is also ramping up investing through Vision Fund 2, to which it has committed $40 billion of capital, with the unit making 47 new investments worth $14.2 billion made in the April-June quarter alone.
In the first quarter, Vision Fund unit gains included 310 billion yen from selling shares in investments including delivery firm DoorDash Inc and ridehailer Uber Technologies Inc.
First-quarter group net profit, however, fell 39% to 762 billion yen.
SoftBank has also been betting on publicly listed shares through its SB Northstar trading unit. It held stakes in firms worth $13.6 billion at the end of June with the portfolio no longer including Microsoft Corp or Facebook Inc listed three months earlier.
Chief Executive Masayoshi Son will speak at a news conference from 07:30 GMT.
($1 = 110.3900 yen)
(Reporting by Sam Nussey; Editing by Christopher Cushing)
Wanda Rich has been the Editor-in-Chief of Global Banking & Finance Review since 2011, playing a pivotal role in shaping the publication’s content and direction. Under her leadership, the magazine has expanded its global reach and established itself as a trusted source of information and analysis across various financial sectors. She is known for conducting exclusive interviews with industry leaders and oversees the Global Banking & Finance Awards, which recognize innovation and leadership in finance. In addition to Global Banking & Finance Review, Wanda also serves as editor for numerous other platforms, including Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune.