Softbank’s Vision fund adds close to $1b to quarter’s income

SoftBank Vision Fund
Billionaire Masayoshi Son, chairman and chief executive officer of SoftBank Group Corp., gestures while speaking during a news conference in Tokyo, Japan, on Monday, Aug. 7, 2017. Photographer: Kiyoshi Ota/Bloomberg

Japan’s Softbank Group, that has been in the focus for its mega tech investment vehicle Softbank Vision Fund (SVF), has reported 50.1 per cent rise in its operating income to $4.3 billion (JPY 479.2 billion) for the three months ended June 30, thanks to close to a billion dollars contributed by the vision fund.

The tech giant that reported its earnings for the three months ended June on Tuesday revealed the $93 billion-vision fund’s earnings for the three months ended June– also the first earnings including the vehicle — contributed to an operating income of $958.7 million (JPY 105.2 billion).

“The first quarter results primarily included unrealized gain and loss on valuation of investments that have been agreed to be transferred to SVF from the Company. These assets are expected to be transferred to SVF prior to the end of September 2017. As of the end of the first quarter, no investments were made by SVF,” Softbank said, in its earnings report.

The changes in fair value from the previous fiscal year-end to the end of the first quarter of the investments that have been agreed to be transferred to SVF from the Company have been recognised as valuation gain. The income was driven by the earlier acquisition of US chipmaker NVIDIA.

The fund that is expected to be active across technology sectors such as IoT, Artificial Intelligence, Robotics and consumer internet and fintech has already got four portfolio firms in its kitty including NVIDIA.

Among others that have bagged investment from Softbank are artificial intelligence firm Brain, indoor farming company Plenty and British semiconductor ARM. Earlier during the day, SoftBank Group was reported to be investing $1 billion in Florida-based sports e-commerce company Fanatics Inc.

In fact, the first look at the numbers are not surprising taking into account SoftBank chairman Masayoshi Son’s expectations that have always been to make similar returns on the fund as his company, that has achieved over 40 per cent annual returns for many past years.

Among prominent backers of the fund are Saudi Arabia’s Public Investment Fund that pooled $45 billion in equity and debt and Abu Dhabi’s Mubadala which invested $15 billion. Tech biggies such as Apple, Qualcomm, Foxconn and Sharp have also made contributions.

Softbank has earlier invested in ride hailing firms like Didi in China, Lyft in US, Ola in India (where it also burnt its fingers incurring losses) and Grab in Southeast Asia. In fact, the Japanese investor’s largest investments in India, Ola and Snapdeal had to be written down in value by $1.4 billion. The firm that had made an entry to India making big ticket investments in Ola and, has not seen its investments work well and that had egged it to scout for mergers.

Recently, Masayoshi Son also expressed interest to invest in the ride hailing companies Uber Technologies and rival Lyft Inc, even though in some markets all the portfolio firms may be competing with each other.

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