Japanese technology investor SoftBank Group on Thursday booked a net profit of $2.87 billion in the first quarter, driven by gains among larger listed investments in its Vision Fund portfolio.
The result will likely be welcomed by investors as SoftBank pursues its biggest spending spree since the launch of its Vision Funds in 2017 and 2019, this time making mammoth investments in artificial intelligence companies.
Investors and analysts are awaiting updates on how these investments will be financed, the timeline for returns to materialise and whether assets will be sold to fund the new projects.
Favourable market conditions for technology companies over the quarter raised valuations of SoftBank’s array of startup stakes, potentially fuelling monetisation opportunities that can be directed toward newer investments.
SoftBank’s Vision Funds hold $45 billion worth of late-stage companies ready to list soon, up from $36 billion at the end of March.
The group overall logged a net profit of 421.8 billion yen ($2.87 billion) for the April-June quarter.
The result compared with a net loss of 174.3 billion yen for the same period a year earlier and the 127.6 billion yen average profit from three analyst estimates compiled by LSEG.
The Vision Fund unit posted an investment gain of 726.8 billion yen ($4.94 billion), around half of which derived from a surge in the share price of South Korean e-commerce firm Coupang over the quarter.
AI investment spree
SoftBank is leading a $40 billion funding round for ChatGPT maker OpenAI. SoftBank has until the end of the year to fund its $22.5 billion portion, although the remainder has been subscribed, according to a source familiar with the matter.
It is also leading the financing for the Stargate project – a $500 billion scheme to develop data centres in the United States, part of its effort to position itself as the “organiser of the industry,” founder Masayoshi Son said in June.
SoftBank has yet to release details on what kinds of returns its financing of the Stargate project could generate. The extent of third-party investment will determine what other financing tools, such as bank loans and debt issuance, it may have to deploy.
In July, SoftBank raised $4.8 billion by selling off a portion of its holding in T-Mobile.
However SoftBank’s performance in exiting from investments and distributing profit has been patchy of late. The Vision Funds have made a cumulative investment gain of just $5 billion out of a total committed capital of $172.2 billion as of the end of June.
($1 = 147.0600 yen)
Reuters
