(Reuters) – Japan’s SoftBank Group Corp on Monday reported a $13.5 billion net gain on investments in its two Vision Funds, as a broad upswing in tech valuations brought the value of its mammoth first fund back above water.
The recovery in the first Vision Fund is likely to be seen as welcome news for investors unnerved by some of SoftBank’s recent stumbles, even as the results were tainted by a $1.3 billion hit after a derivative loss related to investment in listed stocks.
Founder Masayoshi Son had long enjoyed a reputation for investing prescience – he was an early backer of Chinese e-commerce giant Alibaba Group Holding Ltd – but that was tarnished after the spectacular flame-out of portfolio company WeWork and missteps following the pandemic.
“I’m not that hung up on the numbers,” Son said of the group’s earnings, reiterating SoftBank’s view that net asset value is the primary measure by which the firm should be judged.
SoftBank said it had net gain on investment from the two funds of 1.4 trillion ($13.5 billion) in the six months through September, though much of that reflected unrealised profit from portfolio companies.
The first fund is now worth some $76.4 billion, slightly north of the $75 billion paid for its 83 investments, it said.
The smaller second fund saw a big uplift following the listing of housing firm Ke Holdings Inc . The second fund had a fair value of $7.6 billion versus a total cost of $2.6 billion, SoftBank said.
The Japanese conglomerate has been selling down core assets such as stakes in Alibaba and domestic telco SoftBank Corp to raise cash to weather the COVID-19 pandemic.
Son in August said SoftBank would park excess cash from asset monetisation in technology stocks and derivatives in at attempt to capitalise on an uplift in valuations in the sector.
The bets, which come as SoftBank hopes to reestablish its investing chops after its struggles, were undone by a 292 billion yen derivative loss.
Still, at September-end, SoftBank held positions worth $16.8 billion in stocks including Amazon.com Inc , Google parent Alphabet Inc and Facebook Inc .
The firm said net income attributable to shareholders was 1.88 trillion yen for the six months through September, a more than four-fold increase from the same period a year earlier.
That primarily reflected a gain related the merger of portfolio firm Sprint with T-Mobile US Inc , it said.
The group has dropped operating profit as a performance metric, citing a shift away from running businesses to tech investing.
SoftBank has also used some of its cash to buy back shares, under a programme that has pushed its stock price to record highs.
However, the persistent gap between SoftBank’s market capitalisation and the value of its assets has left frustrated executives mulling plans to take the group private, Reuters reported in September.
Conversely, SoftBank is planning to list a blank-cheque company to attract outside investment to its Vision Fund, in a sign of returning confidence after a string of soured investments shook the group’s earnings, a source said last month.
Reporting by Sam Nussey; Editing by David Dolan and Christopher Cushing