SoftBank Group founder Masayoshi Son, who rocked the private equity industry in May 2017 with the launch of the Vision Fund, seems to be less aggressive about expanding the scale of his grand vision.
On the company’s fiscal year 2018 Q3 earnings call on Wednesday, Son said the timing for the next fundraising, as well as the vehicle’s size and structure, are under discussion. “We are doing very good,” he said. “[The] Vision [Fund], it just about started. AI revolution, it just about started. Of course, we’re going to continue.”
“When the time comes, then… it will come. But I don’t need to rush… there are many considerations and preparations going on.”
Son’s recent statement reflects a softer stance on his otherwise ambitious plans for the Vision Fund. In October 2017, he said in an interview with Nikkei that he expects to launch Vision Funds 2, 3 and 4 every two years, and that “Vision Fund is just the first step and ¥10 trillion ($91 billion; €80 billion) is simply not enough”.
The Vision Fund has raised concerns among industry professionals around competition for deals resulting in higher-priced assets, as it snaps up the hottest next-gen innovation companies from China to Silicon Valley. Capital raised for the Saudi-backed Vision Fund reached $97 billion as of 31 December 2018. More than half – $45.5 billion – has been invested across 49 investments globally, Son said on the earnings call.
He noted that the fund is the biggest contributor to SoftBank Group, which saw a 52 percent increase in net income in the quarter.
The Vision Fund saw an ¥838.7 billion gain on investments for the nine months ending 31 December 2018, from ¥254.9 billion in the same period the previous year. Of that figure, ¥693.2 billion was attributed to a valuation gain from the increase in the fair values of Uber, Indian hospitality company OYO and co-working company WeWork.
In addition, ¥146.7 billion was added to the fund when it offloaded its entire stake in e-commerce company Flipkart to Walmart International in September 2018. The firm, however, lost money on US chipmaker NVIDIA when the company’s share price plummeted last year as demands for its chips dried up. A majority, or about ¥300 billion, was recovered when it sold its entire 4.9 percent shareholding in January, Son said.
Nine out of the 49 investments, including ride-sharing companies Uber and Grab, were moved from SoftBank Corporation to the Vision Fund during FY Q1 to Q3 2018, which amounted to $10.4 billion, or about 23 percent of the invested capital, as of fiscal year Q3, according to the earnings statement.
About 250 to 350 investment professionals in London, the US, China, Japan and India were dedicated to the Vision Fund’s transactions in the past 18 months, Son said.
Asked whether he expects Saudi Arabia’s Public Investment Fund to back the next Vision Fund, Son noted the “good relationship between the PIF and the fund’s management”, but said it’s too early to say.
“When it comes to [the] next fund… with what kind of term we go in to raise money, it’s still too early to discuss. There are terms to be discussed, conditions to be discussed… that’s how I see the situation.”