SoftBank doubles down on Vision Fund II while ‘not that popular’ with investors

The Japanese tech conglomerate pledged earlier this year to deploy its own money before raising additional third-party capital due to the underwhelming performance of Vision Fund I.

SoftBank Group has doubled down on the second Vision Fund as it seeks to build a solid track record before raising third-party capital.

Vision Fund II had $10 billion of committed capital as of 9 November, up from $5 billion at 30 September, according to its Q2 earnings statement on Monday.

Fund II is 100 percent financed by SoftBank Group, chief executive Masayoshi Son said via translator on an earnings call. It has yet to hold an external close, though it is expected to admit third-party investors in future, per the earnings statement.

The Japanese tech conglomerate pledged in February to deploy its own money before raising additional third-party capital due to the underwhelming performance of its 2017-vintage Vision Fund I. The $98.6 billion fund was hit by a misjudged investment in WeWork, among others.

“Vision Fund II and Vision Fund III are open always to third-party investors but at the moment we are not that popular yet,” Son said. “But we have investors that we have been working with for a long term and we want to respect them and again we keep our doors open always.”

LPs in Vision Fund I include Apple, Abu Dhabi’s Mubadala Investment Company and Saudi Arabia’s Public Investment Fund, according to PEI data.

Fund II deployed $640 million in the three months to 30 September, bringing its total invested to $2.6 billion in total across 13 portfolio companies, the results said. The fund posted a $5.1 billion unrealised gain during the period following the listing of online housing platform Beike in August.

Fund I made $1.7 billion of follow-on investments in the three months to 30 September and completed 10 full or partial exits for a total of $3.1 billion, the results said. It posted a $7.6 billion unrealised gain for the quarter, of which $4 billion was recorded on unlisted portfolio companies.

Q2 2020 marked the second successive quarter of reported growth for Vision Fund I, having recorded a rare gain last quarter on the back of three consecutive quarters of losses. The improvement was attributed in part to a surge in demand for online businesses, such as e-commerce and food delivery, during the pandemic.

“We have Vision Fund investing in WeWork and some people criticised its big loss and so on, [saying that] Vision Fund is [at an] end,” Son said. “However, that’s not true at all.”