Big tech, big bets and big profits.
Individual gains and losses are hard to ascertain, and commentary mentions certain holdings as contributing to overall unrealized results.
In presentation materials, the company listed current unicorn-status holdings that span ByteDance, Uber, DiDi, WeWork, and Grab that can be found in the Vision Fund — giving the nod to a strategy that has taken shape through the past few years, with laser focus on startups changing the way people connect with commerce and transport, done now across platforms and using Big Data.
Unrealized gains have been notable, up 408.5 billion yen ($3.9 billion). Without specific contribution, the company has said that fair values of OYO (an Indian room booking company) and its affiliate, Slack and DoorDash increased. That 408 billion yen, net, comes in contrast to SoftBank’s filing that unrealized losses from companies such as Uber totaled 195.3 billion yen ($1.8 billion).
On a cost basis, filings show the company pegged the investments at $66.3 billion of committed capital, with a fair value of current holdings at $82.2 billion.
Uber And Beyond
Drill down a bit, and there are signs of how certain bets have fared on the way to that fair value estimate even as precision might be elusive. One quarter is simply a snapshot, but the theme remains the same: disruption.
Uber springs to mind here because Softbank has become the company’s largest shareholder, with a slug of January 2018 buys that topped $9.3 billion. The fact that losses got a specific Uber callout in the most recent report speaks to at least some of the impacts of volatility, especially in the wake of its May IPO.
In the wake of that listing, the stock dropped several percentage points through the end of the quarter. Back when the Vision Fund was taking its stakes, Uber had a valuation of $69 billion, and reports at the time had pegged the Uber stake as being tied to a valuation around $48 billion. Yet the company still had to mark down at least some of the value of its holdings.
DoorDash has gained much in terms of implied market value. Earlier this year, the company raised $600 million in a funding round, and reports in May pegged overall valuation at $12.6 billion where last year it had been $7 billion. When Softbank took its stake in DoorDaash in March of 2018, the valuation was $1.4 billion. WeWork, too, is worth $15 billion now, roughly three times what the company’s valuation was two years ago when SoftBank invested $4.4 billion.
Slack represents another holding where the Vision Fund has seen markups beyond its $250 million listing back in 2017, when the company was valued at $5.1 billion. The company went public through a direct listing that has a market cap in recent days of $15 billion.
The investments in technology have helped offset the impact of losses Softbank had in Sprint, where Softbank is an 80 percent owner, and in semiconductor firm Arm.
Drilling down a bit more into segment bets, data sheets from the company show that transportation and logistics remain the largest slice of holdings, with a net positive change in fair value of holdings for the June 30 period of $15.9 billion, to $33.5 billion. The consumer segment was the next largest group at fair value of $14.8 billion, up $4.7 billion. The FinTech space had fair value of $4.2 billion at the end of the period, up $1.9 billion.
Is there a common theme across the far-flung tech holdings? A few seem to emerge — namely, platforms such as that of Uber and Big Data analyzed intelligently, in part, through AI. Bloomberg noted that AI enables OYO to analyze properties quickly, and it helps Grab (which got a $1.4 billion investment from Vision in May) speed food delivery. This sets the stage for success in Vision Fund 2, which will be focused only on AI.
The sequel comes even as the original still has legs. The original Vision Fund is looking to put more money to work (beyond the $66 billion, the company will have committed roughly another $20 billion within two months, executives have said).
Vision Fund 2 has $108 billion in committed capital and is slated to begin investing as soon as next month, The Wall Street Journal reported earlier this week. The roster of heavy hitters already includes — through memorandums of understanding — Apple and Microsoft. It’s safe to say those companies know a thing or two about tech investing, too.