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Saudi-backed SoftBank earnings surge on Vision Fund valuation

Japan’s SoftBank Group Corp. reports a 49 percent jump in quarterly profit
SoftBank also said profit was bolstered by the sale of most of the Chinese operations of chip design unit ARM Holdings

LONDON: SoftBank has reported a 49.2 percent surge in its latest quarterly earnings due in part to a valuation gain of 245 billion Japanese yen ($2.2 billion) at its tech-focused Saudi-backed Vision Fund.

The fund’s investment gain was a result of the sale of the Indian e-commerce company Flipkart to US chain Walmart. An increase in the value of the fund’s stakes in the US-based co-working space provider WeWork also bolstered earnings.

The Tokyo-based telecoms investor recorded an operating income for the three months ending June 30 of 715 billion yen, according to an earnings release on Monday.

This compares to an operating income of 479 billion yen recorded in the same time period the previous year.

Net income attributable to the owners of the parent reached 313.7 billion yen by the end of June this year.

The company’s results were further boosted by the one-time gain of 161.3 billion yen following the sale of the China unit of the company’s subsidiary, Arm Holdings. Arm is a British chip maker owned by SoftBank.

The sale of Flipkart was the first public divestment by Vision Fund and is hoped that it will demonstrate to investors that the fund is starting to be able to turn its multitude of tech investments into profitable returns.

Vision Fund was set up in 2017 by SoftBank’s chief executive officer Masayoshi Son and targets a range of tech companies, particularly those specializing in artificial intelligence and robotics.

Saudi’s Public Investment Fund provided $45 billion toward the $100 billion fund.

The technology giant, Apple, also has a stake in the fund alongside Abu Dhabi’s Mubadala Investment Company and a number of other investors.

Up until the end of June, Vision Fund had invested a total of $27.1 billion in 29 companies, which have a current value of $32.5 billion.

The fund has a total committed capital of $91.7 billion.

The fund has a vast portfolio of tech firms, including business messaging service Slack, ride-sharing app Uber and the Swiss pharmaceuticals start-up firm Roivant. It also includes companies developing self-driving vehicles, a used car wholesaler and an online payment firm.

According to Bloomberg, Son said during a Tokyo briefing on Monday: “The Vision Fund will continue to deliver results every year and increase its value.”

“We are creating a group of the world’s most advanced unicorn companies,” he said. SoftBank had already built a name for itself as one of the world’s largest tech investors, acquiring stakes in the Chinese e-commerce giant Alibaba.
Saudi Arabia’s investment in the fund reflects the Kingdom’s desire to diversify its economy away from a dependence on the oil sector and into new industries such as fintech and artificial intelligence.

Earlier this year, the Kingdom launched Fintech Saudi — an initiative to drive innovation in technology within the country.

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