Yahoo Finance SoftBank Vision Funds profit chips away at $7.5B in cumulative losses
SoftBank Group CFO Yoshimitsu Goto speaks at Tuesday's earnings call.
SoftBank's Vision Funds are finally back in the black.
The unit—Vision Fund 1 and 2 and its Latin America strategy—reported a quarterly profit for the first time in six quarters after an investment gain of 134.7 billion Japanese yen (about $939 million).
But the quarterly profit comes with a caveat: It was helped substantially by valuation gains at semiconductor maverick Arm and payments business PayPay, in which the Vision Funds hold stakes.
Arm is gearing up for a September IPO at a valuation between $60 and $70 billion, Bloomberg reported, which will offer a major liquidity windfall for SoftBank and potentially help restart the IPO market.
But Masayoshi Son isn't out of the woods yet. Arm reported an 11% decline in sales to $641 million over the last quarter. Slowing consumer demand for chips as the tech sector recovers has hurt semiconductor producers across the board and may have a negative impact on the Arm listing.
SoftBank is also newly embroiled in a lawsuit against the CEO of IRL, alleging that the social media startup falsified data to investors about its user growth rate.
Since 2017, the Vision Funds have piled up billions of dollars in losses. As of June 30, SoftBank Group had taken a cumulative loss on 72% of its portfolio companies totaling $56.5 billion, offset by total gains on its investments of $49 billion—leaving a $7.5 billion hole across the unit. The firm went into "defense mode" when tech valuations started to take a turn in May 2022, and has been selling off huge stakes in Chinese ecommerce conglomerate Alibaba to shore up more liquidity.
The venture funds are slowly deploying dry powder again, having spent $1.8 billion on new investments over the last quarter, predominantly in AI companies, while keeping "a good balance between gas and brake in resuming investment activities," SoftBank Group CFO Yoshimitsu Goto told shareholders at Tuesday's earnings call.
But they're doing so "carefully, carefully," Goto was quick to emphasize.
Featured image by YUKI IWAMURA/Getty Images
This article originally appeared on PitchBook News
