Tokyo-SoftBank Group will suspend investment in China to wait for regulatory measures on Chinese tech companies to be implemented, CEO Masayoshi Son said on August 10.
“We are looking forward to the situation until it becomes clear,” the son said at a press conference. “I believe that within a year or two, new rules will create new situations.”
When the Japanese conglomerate posted a record annual profit in May, the executive was Didi Global Inc, a Chinese ride-hailing service company. And Full Truck Alliance Co Ltd, a startup of “Uber for trucks”. He pointed out that it would be even more advantageous to invest in the Vision Fund.
Although these companies are listed on New York, China’s regulatory measures have since boosted their valuation and are also trying to reduce their reliance on the shares of China’s largest e-commerce giant Alibaba Group Holding Limited, which is the group’s largest asset. Nevertheless, it emphasizes SoftBank’s China risk.
This shift has cooled investment in China, which accounts for about a quarter of SoftBank’s fund portfolio.
The Vision Fund unit posted a profit of $ 2.14 billion in the first quarter on Tuesday as the profits from the listing were offset by the fall in stocks of companies such as South Korean electronic retailer Coupang Inc.
China’s turmoil has clouded the group’s outlook, with its share declining one-third from its 20-year high in March, with a record $ 22.6 billion repurchase completed. The stock closed 0.9% above earnings.
“Having a large public portfolio brings volatility, but at the same time it allows us to continue to monetize in a very disciplined way,” Govil said.
Slumping stock prices and speculation by sell-side analysts have driven expectations that buybacks may be imminent.
“So far, we’ve sold our assets and announced a buyback. There was no such event this time,” said his son.
Given the gap between the group’s stock price and the value of its assets, he added: Timing and size are what we think about every day. “
Benefits of Vision Fund
More than two-thirds of the initial $ 100 billion Vision Fund portfolio is listed or closed. Since its inception, SoftBank has distributed $ 27 billion to limited liability companies.
According to Gobir, listings by Indian payments firm Paytm, insurance aggregator Policybazaar, and Southeast Asian ride-higher Grab will improve further.
SoftBank is also increasing its investment through Vision Fund 2, investing $ 40 billion in capital and making 47 new investments worth $ 14.2 billion in the April-June quarter alone.
The son said he would invest in a second fund through a SoftBank stake-backed scheme.
For the unit gain of the Vision Fund in the first quarter, the shipping company Door Dash Inc. And ride hiler Uber Technologies Inc. Includes $ 2.8 billion due to the sale of shares in investments such as.
However, the Group’s net profit was down 39% to $ 6.9 billion.
SoftBank is also betting on listed stocks through the SB North Star Trading Unit.
As of the end of June, it had $ 13.6 billion worth of shares in its portfolio, including Microsoft Corp and Facebook Inc, which were listed three months ago. Is not included.
The unit will shrink as SoftBank prioritizes the Vision Fund, Son said.