Japan's SoftBank set for small profit rise, Vision Fund IPO plans eyed

World
Europe

Japan's SoftBank Group Corp is expected to report a small rise in its fourth-quarter profit, while investors look for details on whether the conglomerate plans to monetize its almost 100 billion U.S. dollars Vision Fund through an IPO.

SoftBank is considering taking the Saudi-backed investment fund public, a source said on Friday, adding that no formal process has been started.

Following the listing of the group's domestic telco SoftBank Corp in December, the Vision Fund is the largest segment in SoftBank's earnings without a market valuation.

It is, however, unclear how the world's largest technology investment fund could be listed in its current form.

SoftBank is expected to post on Thursday a 1 percent rise in operating profit to 156 billion yen (1.41 billion U.S. dollars) for the three months ended March, an average estimate of three analysts polled by Refinitiv shows. SoftBank has not provided a forecast and moved to new accounting standards this financial year.

The results come at a potential inflection point for the group and the Vision Fund as portfolio companies like Uber Technologies and the owner of WeWork, The We Company, prepare to list, putting a price tag on some of the conglomerate's largest bets on unlisted startups.

With investors struggling to quantify Vision Fund's growing investments amid a lack of clarity over its valuation methods, analysts think the listings could help underscore its strategy.

Uber is set to price its 10 billion U.S. dollars IPO on May 9, seeking a valuation of up to 90 billion U.S. dollars. That is lower than what Uber insiders had hoped for, but investors have reported strong demand for the shares.

The lower valuation comes after rival Lyft Inc's poor stock performance after its market debut. That reflects investor skepticism over Lyft's path to profitability, with peers like Uber and WeWork also heavily losing money.

In China, Sequoia Capital China, viewed as a bellwether for tech investment, is set to lay off as much as 20 percent of investment staff as a slowdown in the tech sector saps appetite for risk, two people have said.

While the Vision Fund has previously profitably exited its stakes in Indian online retailer FlipKart, which it sold to Walmart, and in already-public chipmaker Nvidia Corp, Uber will be its first portfolio company to go public.

SoftBank's rapidly growing investments continue to cause investor headaches in valuing the business, while also raising concerns about returns and SoftBank's indebtedness.

Last week, a newly created Latin America-focused fund under SoftBank Group COO Marcelo Claure made its first move after SoftBank announced a 1 billion U.S. dollars investment in Colombian delivery app Rappi.

Source(s): Reuters