SoftBank Group recorded a loss of $ 1.3 billion (€ 1 billion) on its unexpected diversification into trading in listed tech stocks using a war chest amassed in a wave of asset sales triggered by a pandemic .
However, the Japanese conglomerate posted a net profit of $ 6 billion for the July-September quarter, helped by further signs of a recovery in its $ 100 billion Vision fund since the WeWork debacle.
Monday’s results were SoftBank’s first since it was revealed in early September that the tech group led by Masayoshi Son was the “Nasdaq whale” behind the billion-dollar purchase of U.S. equity derivatives that fueled a rally of major American technology stocks.
Its loss on publicly traded tech stocks came even as SoftBank said that at the end of September, the Vision Fund’s $ 75 billion investment in 83 start-ups was worth $ 76.4 billion. .
This gain is in part due to the fund’s investment in KE Holdings, owner of online real estate platform Beike Zhaofang, which raised around $ 2 billion in August in the largest Chinese listing in the United States since two years. Its share price has since risen 278 percent from its initial public offering price.
For the three months to September, SoftBank Group reported net profit of 627.5 billion yen (5 billion euros), well above analysts’ forecast of a net profit of 150.3 billion yen, according to S&P Global Market Intelligence, helped by a global technology rally. stocks. It compares with a net loss of 700.2 billion yen a year earlier and a profit of 1.25 trillion yen in the previous quarter.
Since the coronavirus-related market turmoil in March, SoftBank has sold around $ 90 billion of its holdings, including stakes in T-Mobile, Alibaba, and its domestic mobile businesses. This helped bring its cash position to 5.1 trillion yen at the end of September, from 3.3 trillion yen at the end of March.
The group also recently agreed to sell UK chip designer Arm for $ 40 billion to US chip group Nvidia.
Using some of that money, which was originally intended to buy back stocks and reduce debt, SoftBank has since – through an asset management arm using part of Mr. Son’s capital – invested $ 17 billion. of dollars in stocks such as Amazon, Alphabet and Facebook, and about 2.7 dollars. billion dollars in equity derivatives.
SoftBank shares rose 5% on Monday ahead of results, which came out after the Tokyo market closed.
The stock is up 48 percent for the year.
However, analysts said SoftBank still trades at a discount to the value of its holdings as investors remain nervous about the hidden risks of its investment strategy. – Copyright The Financial Times Limited 2020