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Softbank Rebounds to $16.3 Billion Profit After Record Loss

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Key Points

  • SoftBank Group bounced back from a record loss to post a first-quarter profit as valuations for technology start-ups recovered from the coronavirus pandemic.
  • Income from the Vision Fund was 129.6 billion yen, after a loss of 1.13 trillion yen in the previous quarter.
  • After the worst loss in his company’s 39-year history, Masayoshi Son has pulled off a remarkably quick comeback.
  • Visit The Financial Today’s homepage for more stories.

Tokyo • SoftBank Group ($SFTBY) bounced back from a record loss to post a first-quarter profit as valuations for technology start-ups recovered from the coronavirus pandemic.

Net income hit 1.26 trillion yen for the three months ended June 30, the company based in Tokyo said yesterday in a statement, compared to a loss of 1.44 trillion yen three months earlier.

Income from the Vision Fund was 129.6 billion yen, after a loss of 1.13 trillion yen in the previous quarter.

After the worst loss in his company’s 39-year history, Masayoshi Son has pulled off a remarkably quick comeback.

A global rally in technology shares lifted the value of SoftBank’s stakes in publicly traded firms such as Uber Technologies and improved start-up prospects in its portfolio, from China’s Didi Chuxing to South Korea’s Coupang.

Son was also selling off assets and buying back shares at unprecedented rates, pushing SoftBank’s own stock price to the highest in two decades.

“There is a real case for increasing valuations at the Vision Fund, given how much the overall tech markets have rallied,” Justin Tang, head of Asian research at United First Partners in Singapore, said ahead of the announcement. “There are still a lot of caveats.”

Son’s US$ 100 billion Vision Fund set up three years ago to invest in technology firms has been a core driver of SoftBank’s income.

SoftBank marks the valuation of its extensive portfolio up or down based on changes over the previous months, reporting the net result to the Vision Fund as a profit or loss.

The exact figures are not known but the valuation of a private peer will usually gain from a rally for a public corporation.

Take Uber for example. Over the last fiscal year, a plunge in its shares cost SoftBank billions, but in the quarter of June, the stock rebounded 11 percent.

That translates into a profit for the Japanese company and may mean that it can write valuations for the rest of its ride-hailing portfolio, which includes Didi, Southeast Asia’s Grab, and Ola in India.

Several SoftBank-backed firms have pulled off successful initial public offerings, improving prospects.

Online home insurance provider Lemonade more than doubled in the days that followed last month’s initial public offering, while oncology drug developer Relay Therapeutics has surged roughly the same amount since its trading debut.

Beike Zhaofang, a SoftBank-backed Chinese online property brokerage, said last week that it is trying to raise around US$ 2 billion in a US IPO. DoorDash, a SoftBank-backed US food delivery company, has filed paperwork for a public stock listing. Online insurance platform Policybazaar and e-commerce giant Coupang are preparing for next year’s offers.

Son put plans for a second Vision Fund on hold after missteps, including the meltdown at WeWork. Now, the fund’s upbeat results and a renewed investor appetite for risk could revive the idea, according to Atul Goyal, a senior analyst at Jefferies Group.

“With so much money sloshing around in the global financial markets, the idea of successive Vision Funds could be back on the table,” Goyal said ahead of the results announcement.

“SoftBank suffered some reputation damage with the first one, but in five or six months Son could have a few spectacular exits he can use to start raising money again.”

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