TOKYO: SoftBank Group Corp shares surged as its paper profit from the initial public offering (IPO) of DoorDash Inc hit US$11.2bil, adding to gains from the prospect the Japanese company could attempt to go private.
The Tokyo-based company’s stock rose 11% to 8,306 yen a share, the biggest jump since March. DoorDash shares closed up 86% on the first day of trading, giving the food-delivery company a market capitalisation of US$60bil.
SoftBank’s stock had already surged to a 20-year high on Wednesday, after Bloomberg News reported founder Masayoshi Son is considering a “slow-burn” buyout to take the company private. The shares are up 75% this year so far, pushing its market valuation to more than US$165bil.
“DoorDash plus yesterday’s news about the MBO have seen investors rushing to get a piece of SoftBank, ” said Justin Tang, head of Asian research at United First Partners in Singapore.
“It was a perennial concern that SoftBank cannot monetise its investments. That narrative is changing and Vision Fund results are likely to have more impact on the share price going forward.”
The DoorDash gain could raise profit in SoftBank’s Vision Fund unit to its highest ever, after record losses in the last fiscal year. The global rally in technology shares has lifted the value of stakes in public firms like Uber Technologies Inc and improved the prospects for startups in its portfolio.
Vision Fund’s profit in the coming quarters is likely to receive a boost from more portfolio companies planning IPOs, a list that includes South Korean e-commerce giant Coupang Corp, online insurance platform Policybazaar and used car retailer Auto1 Group GmbH.
SoftBank owns 20% of DoorDash post IPO, a stake it acquired over a period of two years for US$680mil.
The Vision Fund first invested in DoorDash in the spring of 2018, acquiring almost 51 million shares at a price of US$5.51. It did so again twice the following year, as the price climbed to US$22.48 and US$37.94.
The final round this June saw SoftBank pay US$45.91 for just a little over one million shares.
DoorDash had 50% of US market share as of October, surging past UberEats, GrubHub and Postmates, according to its filing documents.
That number is up from just 17% in January 2018. DoorDash said there is also an opportunity for that market to expand, with fewer than 6% of US residents currently using its service.
Revenue in the first nine months of the year more than tripled and its net loss narrowed from a year earlier on a surge in new customers, the company said. — Bloomberg
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