SoftBank Vision Funds back in red in March quarter with a $300-million loss

SoftBank Group CEO Masayoshi Son

Japanese conglomerate SoftBank’s two Vision Funds reported a combined loss of $300 million in the January-March period, slipping into red after reporting profit for three straight quarters.

The loss comes even as the two funds, which cumulatively boast of over $150 billion of committed and deployed capital, are reportedly exiting their investments at a quick pace to make fresh bets on artificial intelligence (AI) companies.

The funds sold investments for a total of $21.99 billion in FY24, including full exits from 17 portfolio companies, including Arm, and partial exits from several portfolio companies.

While the first fund doesn't make fresh investments anymore, the second one made investments totaling $2.14 billion in the fiscal year.

The Vision Fund 1 didn't see any change in the value of its holdings in the quarter, while the Vision Fund 2 saw a loss of $300 million during the period.

In the December quarter, the two funds cumulatively gained around $3.6 billion in value.

The investor in companies like chipmaker Arm, social media powerhouse ByteDance and e-commerce giant Alibaba slowed investing over the past couple of years as tightening of central bank policies singed funding and valuations in tech.

It also counts Indian tech unicorns like Ola, Delhivery, Paytm, Policybazaar and Meesho among its portfolio companies.

Meanwhile, the SoftBank Group swung to a quarterly profit on Monday, reporting a net profit of $2.11 billion for the January-March period.

After playing 'defence' for some time, SoftBank said mid-last year it is looking to take a more active investing role again, particularly by focusing on artificial intelligence.

Meanwhile, the parent SoftBank Group booked a $6.39 billion quarterly profit in the quarter, returning to black after four straight quarters in the red.

It marks a long-awaited turnaround for SoftBank and its founder Masayoshi Son whose reputation for having a Midas touch with investing was hit after the failure of high-flying office-sharing startup WeWork.

More pain came when SoftBank's portfolio of tech startups in its two Vision Funds - which commanded high valuations between 2020 and 2021 - fell out of favour in the higher interest rate environment that followed the pandemic.

To improve its financial position, SoftBank sold almost all of its "crown jewel" stake in Chinese e-commerce group Alibaba.

In recent quarters, SoftBank has carefully restarted investing and it remains to be seen how much more of an aggressive stance the company might take.

It recently set out stringent quality and valuation criteria for investments, but with few deal announcements to go on, analysts are hoping for clarity on how many companies currently seeking out investment fit the bill.