SoftBank’s Vision Fund has ‘turned around’ after year of losses

Vision Fund posts a $1bn unrealised gain on its unlisted investments as covid-19 bolsters demand for online businesses such as e-commerce and food delivery.

SoftBank Group’s Vision Fund has returned to growth after three consecutive quarters of losses.

The Japanese tech conglomerate posted a ¥296.8 billion ($2.8 billion; €2.4 billion) gain on Vision Fund investments for the quarter ended 30 June, according to a Q1 2020 earnings statement on Tuesday.

It marks the vehicle’s first quarterly gain since the the same period last year, having reported a ¥1.87 trillion unrealised loss for the year to 31 March.

The $98.6 billion fund recorded a ¥258 billion unrealised net gain for the period, of which ¥108.7 billion was driven by unlisted assets. It attributed this growth to the fair value of online businesses such as e-commerce and food delivery, which have had increases in customer engagement during the covid-19 pandemic.

Listed investments also gained $1.4 billion following a rebound in share prices.

“As of today, [performance] has returned and turned around,” chief executive Masayoshi Son said via a translator on Tuesday’s earnings call.

“The second wave of covid-19 pandemic is not over yet, so it is not that we can guarantee that the performance of Vision Fund will remain in positive profitability … but it is getting better and recovering.”

Vision Fund realised ¥111.4 billion in the second quarter by selling a portion of its shares in four listed portfolio companies and all shares of three unlisted assets.

Relay Therapeutics, of which the Vision Fund is the largest shareholder, completed an initial public offering in July, representing a 3.8x gross multiple-of-invested-capital as of Monday, Son said. Nine of the fund’s portfolio companies have been listed to date, representing a 1.5x gross MOIC since inception.

The fund held investments in 86 portfolio companies worth $71.5 billion as of end-June, representing a $3.7 billion unrealised loss since inception.

Son has faced intense scrutiny over his decision-making after the highly publicised failure of Vision Fund’s investment in WeWork, which reported a $5.2 billion unrealised loss for the year to 31 March.

The vehicle’s underwhelming performance led SoftBank to commit to using its own capital for Vision Fund 2 before seeking additional capital from third parties. Vision Fund 2 has invested in 10 companies with more in the pipeline, Son added.

SoftBank is the latest listed firm to report a turnaround of fortunes in recent weeks. Apollo Global Management’s private equity portfolio appreciated 11.7 percent in the second quarter following a 21.6 percent decline in the preceding quarter, while Carlyle Group’s corporate private equity portfolio appreciated 13 percent last quarter following an 8 percent decline.