Japan's SoftBank Group, run by the country's second-richest person Masayoshi Son, swung to an annual net profit of ¥4.99 trillion ($46 billion) in its fiscal year ending in March from a ¥962bn loss a year earlier, on gains made by its Vision Fund as a result of companies it had invested in that went public and the uptick in e-commerce.
The Vision Fund, which includes two funds, reported a ¥4.03tn fourth-quarter profit, the company said on Wednesday in a statement.
The first fund made gains from the listing of Auto1, South Korean e-commerce giant Coupang and View in the fourth quarter, increasing the total number of public offerings for the fiscal year to six. Of the 81 companies in fund one's portfolio, 11 have gone public to date.
Fund one gained $28bn on its 37 per cent stake in Coupang, which it had acquired for about $2.7bn. It also recorded an $8.3bn gain on the listing of food delivery platform DoorDash, $12.1bn from Uber and $2.3bn on its investment in Auto1, the German online car dealer that listed in February. Fund one investors include Saudi Arabia's Public Investment Fund and Mubadala, Abu Dhabi's sovereign wealth fund. Other investors include Apple, Qualcomm, Arm, Foxconn, Sharp and Oracle co-founder Larry Ellison.
Fund two gained from the listing of Qualtrics in the fourth quarter bringing the total number of companies that have listed out of the 44 in the portfolio to three.
Seven special purpose acquisition companies (SPACs) controlled by subsidiaries were also listed, including three controlled by SoftBank Investment Advisers (SBIA). That increased the number of listed SPACs at the fiscal year-end to nine. One of the SPACs completed a merger with an operating company.
Limited partners in the first fund now have a blended internal rate of return of 22 per cent, compared with negative 1 per cent a year ago, Mr Son said in a webcast investor presentation. SoftBank's own IRR for the fund is 39 per cent, while its IRR for the second Vision Fund is 119 per cent.
The total fair value of the first $100bn Vision Fund and the smaller second fund was $154bn at the end of March, with SoftBank distributing $22.3bn to limited partners.
SoftBank increased the capital committed to its second fund to $30bn, from $20bn.
"So far we have been seeing and discovering AI companies ... that deserve investment," Mr Son said. "And so long as we have cash in hand we want to keep investing ... then we should be able to see further growth."
Asked by a reporter if he had concerns about the possible increase of regulations on AI in Europe, Mr Son said there should be some regulation related to AI and that it "is necessary for a new industry in any country ... to address new arising issues".
Tighter regulations in China and Western countries will not impact SoftBank's operations, he said.
"From our perspective, I don't expect that it will have an impact on our investment policy especially since we are looking at unicorns and not giant companies and are looking at new pioneers that would explore new fields," Mr Son said.
On the increasing interest in Bitcoin and companies like Tesla investing in the cryptocurrency, Mr Son said he is still unsure what to make of the appetite to invest in digital currencies.
"Bitcoin, whether its good or bad, there are a lot of debates going on ... how much it has in value, is it a bubble or not, to be honest I don't know," he said.
"But I also know there are people who want to own virtual currencies.
"We still have discussions with my team whether we invest in Bitcoin or not."
The company's share price closed 3.45 per cent down at the end of trading on Wednesday, giving it a a ¥16.6tn market capitalisation. The stock is up nearly 15 per cent year to date.
