SoftBank says Vision Fund 2 could start investing soon, bags big gains on first

TOKYO (Reuters) - SoftBank Group Corp's 9984.T second Vision Fund could start investing as soon as next month, founder and Chief Executive Masayoshi Son said, as the technology conglomerate reported a leap in profits at its first $100 billion fund.

FILE PHOTO: The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo, Japan, July 20, 2017. REUTERS/Issei Kato/File Photo

SoftBank said last week it had secured $108 billion in pledges for its Vision Fund 2 (VF2) from participants including Microsoft Corp MSFT.O and Apple Inc AAPL.O, without breaking out their individual contributions.

The anchor investors from the first fund, Saudi Arabia and Abu Dhabi, are showing “high interest” in taking stakes and negotiations are ongoing, Son said on Wednesday after SoftBank turned in first-quarter operating earnings that blew past consensus estimates.

That result was aided by a stellar performance at the first Vision Fund, whose operating profit jumped 66% on year to 397.6 billion yen ($3.74 billion) for the three months ended June.

SoftBank is relying on proceeds from the first Vision Fund (VF1) along with other assets to bankroll its $38 billion contribution to the second fund.

“Vision Fund 2 could start investing pretty soon, next month or the month after,” Son said.

With the first fund having spent much of its capital on fast growing, late-stage startups like Uber UBER.N and WeWork parent The We Company, SoftBank is now turning its attention to the second fund to maintain its oversized industry presence.

“Many Japanese companies are sailing using an old map. Using our new map we are looking for a new continent,” Son said.

The first fund's $66.3 billion investment in 81 firms is now worth $82.2 billion, as the value of its bets in firms like hotel chain OYO, workplace messaging app Slack WORK.N and delivery service Doordash has grown.

But much of the fund’s gains are paper profits, with its unrealized gains in the first quarter at 604 billion yen.

That was, however, offset by 195 billion yen in unrealized losses from a drop in value of its stake in firms like ride-hailing firm Uber, which is trading below its IPO price.

SoftBank’s results have been increasingly volatile as Son shifts focus from the predictable income of telecoms in favor of bets on startups with shifting valuations.

The group raked in a quarterly operating profit of 688.8 billion yen, outstripping a 336 billion yen estimate from five analysts compiled by Refinitiv.

The number was, however, down 3.7% from a year ago when results were propped up by a stake sale in chip designer Arm’s China business.

SoftBank’s shares, which have rise 42% this year, closed down 0.2% ahead of the earnings.

Reporting by Sam Nussey; Additional reporting by Yuri Harada; Editing by Himani Sarkar