© Reuters. FILE PHOTO: The SoftBank Group Corp. logo is displayed at the 2017 SoftBank World Conference in Tokyo, Japan, July 20, 2017. REUTERS/Issei Kato/File Photo
Written by Sam Nusei and Kiyoshi Takenaka
TOKYO (Reuters) – Japan’s SoftBank Group on Thursday posted a sharply narrower annual loss after raising capital using its stake in Ali Baba (NYSE: Group Holding Ltd) helped mitigate investment losses in the investment arm of Vision Fund.
SoftBank reported a net loss of 970 billion yen ($7.18 billion) for the year ended March 31, compared to a loss of 1.7 trillion yen in the same period a year earlier.
Chief Executive Masayoshi Son’s bid to spin the tech investment industry has suffered a series of high-profile setbacks after outsized bets through SoftBank’s first Vision fund turned sour and investments made in bubble valuations fell through via a smaller second fund.
With the main architects of that strategy left, Son focused on shoring up the balance sheet, reducing his stake in e-commerce giant Alibaba, and cutting back on brand offerings to focus on chip designer Arm’s slate.
The Vision Fund unit reported an investment loss for the full year of 5.28 trillion yen. The investment arm incurred investment losses for the fifth consecutive quarter in the January-March period, albeit with a lower loss than in previous quarters.
Assets gained during the first quarter include e-commerce company Copang, robotics company AutoStore Holdings Ltd, with WeWork Inc among those that fell.
SoftBank has noted the value of private portfolio companies in the first and second funds. At the end of March, the second fund’s portfolio was valued at $31 billion compared to the acquisition cost of $49.9 billion.
investment opportunities
SoftBank said it’s on the defensive, putting investment activity in a bind with its Vision Fund unit striking just 25 new deals over the past year.
In an effort to boost its precautionary capital margins, SoftBank raised $35.46 billion through prepaid futures contracts using Alibaba stock during the fiscal year. Another $4.1 billion was raised through futures contracts for the period after April 1, 2023.
With the uptick in the prices of some tech stocks, investors’ attention has turned to how long SoftBank will maintain its holding pattern.
Referring to the emergence of new technology such as generative artificial intelligence (AI), Yoshimitsu Goto, Chief Financial Officer of SoftBank, said in a statement to the newspaper: “We need to consider whether we should stick to our defensive strategy, or whether we should also be under attack.” instructions.
“We don’t want to miss investment opportunities,” said Goto, Sun’s longtime lieutenant.
The Vision Fund unit confirms that it has stakes in companies like Arm and parent short video app TikTok ByteDance worth about $37 billion ready to go public in the future.
Investors are focusing on the potential for more buybacks. SoftBank shares closed down 0.85% before earnings and are down nearly 9% this year.
As the emergence of artificial intelligence generates global excitement and discussion, Goto said that Sun was also excited about the new technology.
“I worry if he has time to sleep,” Goto said. ($1 = 135.0500 yen)