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SoftBank Vision Fund's $4.6 Billion Annual Gain

SoftBank's Vision Fund celebrated a turnaround 724.3 billion Japanese yen ($4.6 billion) in the fiscal year ending March
May 13, 2024

SoftBank's Vision Fund has finally found its way back to profitability, posting a 724.3 billion Japanese yen ($4.6 billion) gain in the fiscal year ending March. This marks a significant turnaround for the tech investment arm, which had been in the red since 2021.

For the full fiscal year, SoftBank's Vision Fund segment registered a profit of 128.2 billion yen, a remarkable shift from the 4.3 trillion yen loss reported the year before. This turnaround in the Vision Fund's fortunes played a pivotal role in SoftBank Group's return to profitability in the fiscal fourth quarter ending March.

Key to this success was the increase in the value of several high-profile investments, including ByteDance, the company behind TikTok, and U.S. food delivery giant DoorDash. However, not all investments yielded positive returns, with losses incurred from investments in companies such as DiDi and WeWork, the office-sharing company that filed for Chapter 11 bankruptcy protection last year.

The notable gain in the Vision Fund can be largely attributed to the successful initial public offering (IPO) of chip designer Arm, a subsidiary of SoftBank.

Although gains from Arm's IPO are not included in SoftBank's consolidated statement of profit or loss, the tech conglomerate's tech investment arm still posted a loss of 167.3 billion yen when gains associated with Vision Fund investments in its subsidiaries are excluded.

While the road to recovery seems promising, SoftBank still faces challenges. Despite beating estimates for the March quarter, with net sales at 1.75 trillion yen ($11.3 billion) and a net profit of 231.1 billion yen, the company posted an overall loss of 227.6 billion yen for the full year. However, this loss is narrower than the 970.1 billion yen loss reported in the previous fiscal year.

SoftBank's flagship tech investment arm, the Vision Fund, faced significant challenges in the fiscal year ending March 2023, with a record loss of approximately $32 billion. However, signs of recovery began to emerge in the June quarter of the same year, with the Vision Fund reporting its first investment gain in five consecutive quarters.

In 2023, SoftBank founder Masayoshi Son announced a shift from "defense" to "offense" mode, signaling a departure from the cautious approach to making investments.

SoftBank's Chief Financial Officer, Yoshimitsu Goto, highlighted the company's shift from an "Alibaba-centric" portfolio to one focused on AI. Arm, in particular, has become a core component of SoftBank's portfolio, accounting for 47% of the company's assets at the end of March. This marks a significant increase from just 10% in March 2020, while the company's stake in Alibaba has decreased to 0% from 48% in the same period.

"Arm is core to our AI shift," Goto emphasized.

SoftBank's resurgence, marked by the Vision Fund's return to profitability, signals a potential turnaround for the tech conglomerate. With a strategic focus on AI and investments in cutting-edge technologies, SoftBank is poised to navigate the rapidly evolving tech landscape and secure its position as a leader in the industry.

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