SoftBank reports a loss in its Vision Fund business, with a total loss of $6.3 billion
As SoftBank prepares to dive deeper into AI investments.
The group reported an unexpected consecutive quarterly total loss, as well as a continued loss in its existing investment business.
Vision Funds actually reported a profit of $0.8 billion for the quarter, including shared assets like their ARM holdings.
Stripping out shared assets, SoftBank’s Vision Fund 1 and 2.
Its Latin American fund posted a combined quarterly investment loss of 13 billion yen ($91 million) well below a loss of 2,919 billion yen ($20 billion) a year ago.
Collectively, the firm said investments in all three funds had lost $6.3 billion as of June 30.
Overall, SoftBank Group posted a net loss of ¥477.6 billion ($3.3 billion) a surprise as investment analysts had generally expected a return to profitability this quarter.
“We are cautiously and slowly moving back to investment activities,” CFO Yoshimitsu Goto said in today’s presentation, adding that he “will continue to focus on the AI trend.”
The company said its total commitments under Vision Funds 1 and 2 and its LatAm fund are $166.2 billion.
It calculated its acquisition costs at 146.6 billion dollars and the real value of the assets at 140.3 billion dollars.
SoftBank said its Vision Fund 1 and 2 posted quarterly losses of 38.749 billion yen and 46.860 billion yen, respectively.
The LatAm fund had a profit of 47.496 billion and other investments 25.070 billion on “other investments. The Latin American business was mainly boosted by the $1 billion sale of Pismo, one of SoftBank’s portfolio companies, to Visa in June.
SoftBank’s total investment loss, which was further dragged down by falling share prices in Alibaba, Deutsche Telekom and T-Mobile US, was 699 billion yen (around $4.9 billion) in the quarter.
SoftBank has come a long way since its first, older Vision Fund.
The company said that of the 94 investments it has made from the nearly $90 billion fund.
The “fair value” is split between about $37.5 billion in private companies, $20.5 billion in public companies and $44.2 billion in departures.
The fair value of his $108 billion Vision Fund 2 is just $32.2 billion. VF2 is still young and will take the lead in investment in the future, he said.
SoftBank added that approximately 94% of its portfolio companies across all of its funds currently have a cash runway of more than 12 months.
We’re listening to the presentation to hear what SoftBank has to say about Arm and its AI investment, and we’ll update this post with more.
Last week, the company’s Japanese subsidiary, also called SoftBank and overseeing its domestic business. Launched a new venture called SB Intuitions.
Will build a large language model and generative AI service aimed specifically at Japan and Japanese businesses and consumers.
In July, the company also made a major investment in Symbotic, an AI-based warehouse logistics and robotics company, along with a joint venture to build third-party services.
The investment giant has been in “defense mode” since May 2022 after tech valuations collapsed amid sharply higher interest rates and jitters that hit the global banking sector.
This June, founder and CEO Masayoshi Son said he planned to go into “attack” mode amid excitement over advances in artificial intelligence.
That shift was confirmed in first-quarter results, with CFO Yoshimitsu Goto telling reporters on Tuesday that the company was “timidly” embarking on selective new investments.
SoftBank invested a total of $1.8 billion in the quarter. That’s after paring them back to about $500 million over the previous three quarters.
“The bar for investment is very high,” added Vision Fund Chief Financial Officer Navneet Govil.
“They have to be companies that focus on next-generation artificial intelligence with high growth potential.”
The unit sold approximately $890 million worth of holdings, including full exits of three portfolio companies and partial exits of several public portfolio companies.
Son has had to take a more cautious stance on investing after several high-profile investment setbacks. Most notably flexible workspace provider WeWork, whose shares have fallen 98% since going public in October 2021.