SoftBank's Masayoshi Son. Picture: GETTY IMAGES/NUR PHOTO/ALESSANDRO DI CIOMMO
SoftBank's Masayoshi Son. Picture: GETTY IMAGES/NUR PHOTO/ALESSANDRO DI CIOMMO

Tokyo  —  SoftBank Group  on Wednesday reported a record net profit of ¥4.99-trillion ($45.88bn) in the year ended March, beating the $42.5bn made by Warren Buffett’s Berkshire Hathaway in its past business year.

It was the highest-ever annual profit for a Japanese company, after riding a series of blockbuster initial public offerings to reach its record net profit of ¥4.99-trillion. The results include a record profit of ¥1.93-trillion for the quarter, the Wall Street Journal reported. 

It also compares with an ¥962bn loss a year earlier after teetering tech bets  depressed the value of Softbank’s portfolio.

 SoftBank reported ¥4.03-trillion ($36.99bn) Vision Fund unit profit from a fourth-quarter investment gain on Coupang, putting it among the world's biggest earning firms a year after an unprecedented loss.

 “It's clearly validation of Masa’s thesis,” Navneet Govil, Vision Fund's CFO said, referring to company founder and CEO Masayoshi Son.

Market enthusiasm for tech stocks drove the public listing of SoftBank-backed e-commerce firm Coupang and used-car trading platform Auto1 Group and the rising share price of ride-hailing firm Uber during the quarter.

To sustain Softbank’s position among the global corporate elite, Son will have to replicate that fourth-quarter performance with other yet-to-list companies in the Vision fund portfolio. Son has likened that to laying golden eggs.

Candidates including ride-hailing firm Didi, TikTok owner Bytedance and truck service platform Full Truck Alliance  have strong revenue growth, healthy market share and a clear path to profitability, according to Govil.

These companies are “sizeable investments with significant value to be unlocked”, he said.

Much of Vision Fund's gain, however, is on paper with the value of the portfolio locked up in the stock market amid concern over frothy valuations and a boom in special purpose acquisition vehicles (SPACs) which has drawn regulatory scrutiny.

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 has hiked its committed capital in the second fund to $30bn from $10bn, reflecting the breadth of investment opportunities, Govil said.

Son said he may consider inviting third party money into Vision Fund 2.

Two of SoftBank’s highest profile bets, space sharing firm WeWork and ride-hailing firm Grab, have outlined plans to list via SPAC mergers, with Vision Fund reportedly in talks  to use its own such vehicle to list portfolio company Mapbox.

The Grab deal offers further upside for the Vision Fund should the transaction go through, Govil said.

The group's trading arm, SB Northstar, is expanding deal making this week leading a $1bn investment in acquisitive e-commerce firm THG.

SB Northstar and the broader group recorded a ¥233bn loss on investments in listed stocks and derivatives as efforts to work cash reserves outside the Vision Fund sputter.

SoftBank has completed a ¥2.5-trillion buyback programme launched in 2020 which pushed the stock price to a 20-year high in March. The end of the buyback pulls support at a time when shares are sliding in line with weakness in US tech stocks.

Reuters 

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