- After years of struggling to deliver returns commensurate with its substantial investments, the Vision Fund is now reaping rewards from the successful market entries of various startups.
- SoftBank and the Vision Fund are pivoting towards a more focused investment strategy, particularly in the realms of generative artificial intelligence and semiconductor technology.
SoftBank Group Corp has reported its most significant quarterly profit in two years, marking a notable turnaround for the Tokyo-based conglomerate.
In the September quarter, SoftBank achieved a net income of 1.18 trillion yen ($7.7 billion), a dramatic recovery from the net loss of 931 billion yen recorded in the same period last year.
Central to this success has been the Vision Fund, which reported a gain of 373 billion yen, buoyed by a resurgence in the values of several portfolio companies, including Didi Global Inc. and Coupang Inc.
A key driver of this profit surge has been the vibrant initial public offering (IPO) market in India, which has provided the Vision Fund with a much-needed boost.
After years of struggling to deliver returns commensurate with its substantial investments, the fund is now reaping rewards from the successful market entries of various startups.
Startup investments
Notable among these are Ola Electric Mobility Ltd., a prominent e-scooter manufacturer, and Brainbees Solutions Ltd., an online retailer specialising in baby products under the FirstCry brand.
Additionally, the anticipated IPO of Swiggy Ltd, a SoftBank-backed food delivery app, has garnered significant interest, being oversubscribed by more than three times.
The resurgence is particularly significant for the Vision Fund, which has faced substantial challenges in recent years, including two consecutive years of significant losses driven by a downturn in startup valuations. The fund had previously adopted a more cautious investment strategy, scaling back new investments until the recent uptick in the Indian market.
Looking ahead, SoftBank and the Vision Fund are pivoting towards a more focused investment strategy, particularly in the realms of generative artificial intelligence and semiconductor technology.
Share price volatility
Recent investments in companies like OpenAI and Perplexity AI Inc. underscore this shift. Should the IPO market in the United States reopen and demand for Vision Fund companies increase, there is potential for a mini-boom in the coming months.
As SoftBank’s founder, Masayoshi Son, prepares for a substantial push into artificial intelligence and semiconductor investments, the company finds itself in a position of relative strength.
With a robust cash reserve and an increase in asset values, particularly following the rise in share prices of its chip affiliate, Arm Holdings Plc, SoftBank is poised to navigate the complexities of the current investment landscape.
However, the volatility of SoftBank’s share price, influenced by fluctuating investor sentiment regarding the transformative potential of AI, remains a critical factor to watch. Despite experiencing significant fluctuations, the stock has shown signs of recovery following a peak in July.