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SoftBank Group reported a net profit of $21.77 billion in Q2 FY23 on the back of a $37-billion gain from the early physical settlement of prepaid forward contracts of Alibaba’s shares.
Since the company’s voting ownership in Alibaba fell below 20 per cent during the course of the settlement, Alibaba has been excluded as an associate of the company. Besides, the company recorded an unrealised valuation loss of ¥1,077.1 billion ($7.6 billion) on Alibaba shares that continue to be held following a drop in the share price tafter its exclusion as an associate.
Currently, Alibaba accounts for 15 per cent of SoftBank’s equity holdings, while SVF2 accounts for 21 per cent and SVF1 for 17 per cent. Further, the gross performance of SoftBank Vision Fund (SVF) since inception was a $13.5-billion gain in SVF1 and a $14.6-billion loss in SVF2.
$9.74 bn invest loss at SoftBank Vision Fund
SoftBank recorded 1.38 trillion yen ($9.75 billion) in investment losses at flagship SoftBank Vision Fund in the quarter ending September 30. The Japanese conglomerate has decided to slow down investments from the Fund as the equity markets are going through a correction.
Chairman & CEO Masayoshi Son said, “Vision fund has suffered, but it is not just us. Investors around the world have suffered. We believe we have to be in defensive mode. For new investments through SVF, we are going to be more selective.”
SoftBank Vision Fund 1 and 2 investments over the quarters
Going forward, Chief Finanancial Officer Yoshimitsu Goto will lead presentations for SoftBank. According to Masayoshi Son, Goto is a more defensive person and, hence, should lead the defensive phase of SVF. Son noted that he is a more aggressive investor. He would turn his focus on processor technology company Arm.
In line with its defensive strategy, investments through SoftBank Vision Fund 1 and 2 have been decreasing since Q1 FY2021. From investment of $15.6 billion in Q1 FY2021, SVF 1 and SVF 2 have together invested $2.2 billion in Q1 FY 2022 and $300 million in Q2 FY22.
SVF1 invested a total of $260 million in the period, compared to $2.50 billion invested in the same period of the previous fiscal year. SVF2 invested a total of $2.24 billion in the period, compared to $27.17 billion invested in the same period of the previous fiscal year, bringing the fund’s total cost to $49.79 billion.
LatAm Funds invested a total of $250 million in the period, as compared to $2.33 billion invested in the same period of the previous fiscal year. SoftBank sold 21.2 million T-Mobile shares for $2.40 billion in the first quarter. SVF1 and SVF2 also sold investments, including full exits of seven portfolio companies, including Uber and KE Holdings, for $3.60 billion in the period.
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