SoftBank Boosts Earnings With Tech Investment Sales, Including Flipkart Stake

Japan's SoftBank Group Corp reported a 49 percent jump in quarterly profit on Monday, boosted by the sale of its stake in Indian e-commerce giant Flipkart in the first public divestment by the conglomerate's massive Vision Fund.

SoftBank, which is planning to list its domestic telecoms business, also said profit was bolstered by the sale of most of the Chinese operations of chip design unit ARM Holdings.

The sales are the first signs of SoftBank monetising its investments after pumping billions of dollars into technology companies around the world yet taking little profit.

Its Vision Fund is the world's largest private equity fund, raising over $93 billion (roughly Rs. 6.4 lakh crores) at its first major close in May last year. The fund, which is yet to complete its final close, had invested $27.1 billion (roughly Rs. 1.86 lakh crores) in 29 firms as at June-end, SoftBank said on Monday.

Its investments are now worth $32.5 billion(roughly Rs. 22,400 crores) on the rising value of its various stakes such as in shared office space company WeWork Cos. SoftBank has around 1,700 of its own staff currently using some of WeWork Japan's 6,250 seats.

"We are considering moving all of SoftBank's headquarters into WeWork (offices) in the near future," Chief Executive Masayoshi Son said on Monday.

Son has previously said a second Vision Fund is being planned, but on Monday declined to comment on timing or size.

Telecoms IPO
SoftBank, which is increasingly shifting focusing to investment activity from its telecoms business, also reported rising values from stakes in US ride-hailing company Uber Technologies and Southeast Asian peer Grab.

Amid its effort to switch focus, SoftBank is planning to list its Japan telecoms unit in what is widely expected to be one of the country's largest-ever initial public offerings.

SoftBank is planning to seek a valuation of about $90 billion for the unit, Bloomberg reported on Monday, citing people familiar with the matter.

The listing of the unit could happen as early as the fourth quarter, according to the report.

The plans come as e-commerce firm Rakuten prepares to become Japan's fourth wireless carrier next year, potentially adding pressure to SoftBank's telecom earnings. In April-June, the unit booked a 0.7 percent increase in operating profit on sales which grew 4.6 percent.

Group-wide first-quarter profit rose to JPY 715 billion ($6.42 billion or roughly Rs. 44.2 crores) from JPY 479 billion a year earlier, SoftBank said. It did not release a forecast for the current business year ending March, saying there were too many uncertain factors.

SoftBank's shares closed up 2 percent ahead of the earnings announcement. The stock is currently up 6 percent year-to-date.

© Thomson Reuters 2018