SoftBank's vision fund unit back in black in June quarter with $220 million gain

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

SoftBank's two vision funds cumulatively recorded an investment gain of around $220 million ($32.4 billion yen) in the April-June period, after recording a loss of $300 million in the previous quarter.

However, the gain was only around $12 million if SoftBank's other bets, including through its Latin America funds, are considered.

This comes even as the two vision 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 Vision Fund 1 saw the value of its holdings rise by $2.8 billion in the June quarter, while the Vision Fund 2 saw a loss of $2.6 billion during the period.

The vision fund unit sold investments for a total of $0.84 billion in the first quarter, including full exits from six portfolio companies, including SenseTime and Paytm, and partial exits from several portfolio companies.

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

In the June quarter, its Vision Fund 2, which still deploys money, made investments of about $620 million, primarily focussed on frontier tech and enterprise tech. It is a large drop from $1.56 billion in the year-ago period.

SoftBank management, however, revealed in the company's post-earnings call that investments at the group level rose to $1.9 billion in the quarter, indicating that it is making more bets from the company's balance sheet rather than its vision fund unit.

SoftBank said that the fair values of a portion of its investments, including ByteDance, Coupang, and DiDi, increased in the June quarter. However, these gains were offset by decreases in the fair values of other investments, reflecting weaker performance indicators and share price decreases among market comparable companies.

Meanwhile, three of SoftBank's portfolio companies in India — Ola Electric, FirstCry and Snapdeal-backed Unicommerce — are in the middle of their IPOs where the Japanese investor is selling shares worth Rs 1,287 crore ($153 million).

The Japanese investor is sitting on 106 percent gains on cumulative investment of Rs 7,085 crore ($844 million) in Ola Electric, FirstCry and Snapdeal-backed Unicommerce, according to a Moneycontrol analysis of offer documents showed.

While the Japanese tech investor is offering to sell up to Rs 1,287-crore worth of shares through the three initial public offerings (IPOs), it will still be left with up to Rs 11,011 crore ($1.3 billion) worth of stocks after the companies list on the market.

In the year-ago period, the Vision Fund unit had booked an investment gain of about 160 billion yen ($1.1 billion), helped by an increased valuation for Arm, the chip designer whose initial public offering in 2023 delivered blockbuster returns for SoftBank.

Without the fillip from Arm, the picture was less rosy in the June quarter of 2023 with the company's Vision Funds reporting a combined loss of $89 million.

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