TOKYO: Just hours ahead of Uber Technologies Inc’s market debut, the ride-hailing company’s biggest shareholder, Masayoshi Son’s SoftBank Group Corp, is already reaping rewards, if only on paper.
SoftBank’s operating income more than tripled to 494.9 billion yen (US$4.5bil) in the three months to March 31, helped by a 418 billion yen valuation gain from its stake in the ride-hailing giant, the Tokyo-based company reported yesterday. Uber is going public this week in an offering that may give the company a market value of about US$79bil; the stock begins trading today.
SoftBank announced a two-for-one stock split along with the strong earnings, while it keeps the same dividend payout per share. That will effectively double the annual dividend year over year.
Son has been remaking SoftBank Group from primarily a telecommunications operator into a technology investment firm and his US$100bil Vision fund has already emerged as a major contributor to earnings.
SoftBank holds stakes in all of the world’s biggest ride-hailing companies and a successful IPO for Uber could signal more payoffs down the road. Son’s investors may also reap a windfall from the planned listing of Slack Technologies Inc later this year.
“The Vision fund is now the key growth driver for SoftBank and all the attention is on the profits in that segment,” Tomoaki Kawasaki, an analyst at Iwai Cosmo Securities Co, said ahead of the earnings announcement.
The Vision Fund and SoftBank’s own Delta Fund contributed 1.26 trillion yen to profit in the fiscal year ended March 31, or slightly more than half of the total. Investments in 29 companies showed an increase in fair value, while 12 reported a decline.
In addition to Uber, SoftBank also booked a 203.4 billion yen valuation gain from its stake in Guardant Health Inc, which went public in October, and 154.2 billion yen gain in India’s Oyo. It also recorded a 222.6 billion yen loss due to the share price decline in Nvidia Corp.
The Vision Fund holds 69 investments at a cost totalling US$60.1bil, with ride-hailing as the single biggest segment. In addition to Uber, SoftBank has poured more than US$10bil into China’s Didi Chuxing, US$3bil into South-East Asia’s leading provider Grab and US$2.25bil in General Motors Co’s self-driving unit Cruise. Son has said that put together, Vision Fund’s portfolio companies control 90% of the ride-hailing market worldwide.
SoftBank also invested into Slack in September 2017 in a financing round that valued the seller of chat and collaboration tools to businesses at US$5.1bil. The San Francisco-based company could now be worth more than triple that. —- Bloomberg