SoftBank has posted $46bn in annual net profit, the highest for a Japanese company, as Masayoshi Son promised that the blockbuster results would not be a “one-off”.
The record profits mark an important milestone for the founder of the Japanese conglomerate after navigating a turbulent year when some of the Vision Fund’s largest bets were hit by the global pandemic.
“We can’t be too proud since a series of coincidences led to this result. There were many failed investments such as WeWork, Greensill and Katerra,” Son said during a press conference on Wednesday. “But once we have achieved it once, I’m not going to let this end as a one-off.”
The profits for the year ending March 30 were driven by a vibrant US market for initial public offerings, which turned the technology conglomerate’s $2.7bn investment in South Korea’s Coupang into a $28bn stake after the ecommerce company went public in March.
Since the end of March, however, the valuations of some of Vision Fund’s holdings have fallen because of a sell-off in US technology stocks that was sparked by concerns of inflationary pressures.
Coupang’s valuation, which at one point reached $118bn, has fallen to $62bn, while shares in Uber and KE Holdings, the owner of Chinese online property platform Beike Zhaofang, have both fallen 15 per cent since the end of March.
“We believe [the market] volatility is here to stay and our view is that we need to have a very disciplined strategy for monetisation,” a person close to the Vision Fund said.
Son said that the initial public offerings for Vision Fund companies will continue at a robust pace with investors expecting Chinese ride-hailing company Didi Chuxing, Chinese start-up Full Truck Alliance and TikTok owner ByteDance to go public soon.
For the full year that ended in March, SoftBank reported a net profit of ¥4.98tn ($46bn), compared with a loss of ¥961bn a year earlier. That was well above a previous record of a ¥2.5tn profit reported by Toyota during the 2017-18 fiscal year, according to SMBC Nikko Securities.
SoftBank’s Saudi-backed $100bn Vision Fund and its sequel fund, which has now grown to $30bn, reported a ¥6.4tn gain in the value of their investments, including ¥3.6tn in the January to March quarter alone.
Meanwhile, SB Northstar, the SoftBank unit set up to play the market in listed tech stocks, reported derivative losses of $300m for the quarter, bringing total losses to $5.6bn since July.
Kirk Boodry, an analyst at Redex Holdings, said investors had already priced in a record quarter, and their attention had turned to how the IPO market would hold up and whether SoftBank would carry out further share buybacks to support its stock price.
During the January to March quarter, SoftBank also raised $1.15bn via special purpose acquisition companies. Pointing to reports that Vision Fund-backed Mapbox is in talks to go public by merging with a Spac backed by SoftBank, Boodry said: “They said the Spacs [are] not about Vision Fund companies going public. But if that’s the first thing they’re doing, it makes me think that there isn’t anything out there for them. The Spacs cycle looks like it’s closing quickly.”
When asked about the deal, Son said such an arrangement could happen, but added companies backed by the Vision Fund would consider proposals from other Spacs and that a majority would seek to list on public markets without using a blank cheque vehicle.
SoftBank shares were trading at a 21-year high in mid-March but the stock has since fallen 14 per cent. The group did not announce a share buyback on Wednesday as it wrapped up a $23bn repurchase programme that was launched last year during the market sell-off caused by the pandemic.