SoftBank books narrower loss after Alibaba stake sell-down

By Sam Nussey and Kiyoshi Takenaka

TOKYO (Reuters) -Japan's SoftBank Group Corp on Thursday posted a sharply narrower annual loss after a capital raise using its stake in Alibaba Group Holding Ltd helped cushion investment loss at its Vision Fund investing arm.

SoftBank reported a net loss of 970 billion yen ($7.18 billion) for the year ended March 31, compared with a 1.7 trillion yen loss in the same period a year earlier.

CEO Masayoshi Son's attempt to bestride the tech investing industry has suffered a series of high-profile reversals after outsized bets through SoftBank's first Vision Fund turned sour and investments made at bubbly valuations via a smaller second fund slumped.

With key architects of that strategy having left, Son has focused on shoring up the balance sheet, cutting his stake in e-commerce giant Alibaba and stepping back from trademark presentations to focus on the listing of chip designer Arm.

The Vision Fund unit booked an investment loss for the full year of 5.28 trillion yen. The investing arm booked its fifth consecutive quarter of investment loss in January-March, albeit a smaller loss than in previous quarters.

Assets gaining during the quarter include e-commerce retailer Coupang Inc and robotics company AutoStore Holdings Ltd, with office-share company WeWork Inc among the fallers.

SoftBank wrote down the value of private portfolio companies in both the first and second funds. At the end of March, the second fund's portfolio was worth $31 billion compared with an acquisition cost of $49.9 billion.

INVESTMENT OPPORTUNITIES

SoftBank has said it is in defence mode, putting investing activity on the backburner with the Vision Fund unit striking just 25 new deals over the past year.

Looking to bolster its capital buffers, SoftBank raised $35.46 billion through prepaid forward contracts using Alibaba shares during the fiscal year. A further $4.1 billion was raised through forward contracts for the period after April 1, 2023.

With the uptick in some tech stock prices, investor attention has turned to how long SoftBank will maintain its holding pattern.

Referring to the rise of new technology such as generative artificial intelligence (AI), "We need to look at whether we should stick to our defensive strategy, or whether we should also be on offence," SoftBank Chief Financial Officer Yoshimitsu Goto told a news briefing.

"We don't want to miss investment opportunities," Goto, a long-time Son lieutenant, said.

The Vision Fund unit emphasises that it holds stakes in companies including Arm and short video app TikTok parent ByteDance worth some $37 billion ready to go public in the future.

Investors are focused on the potential for further buybacks. SoftBank's shares closed down 0.85% ahead of earnings and have fallen almost 9% this year.

As the emergence of AI generates global excitement and debate, Goto said Son had also been excited by the new technology.

"It makes me worried if he has time to sleep," Goto said. ($1 = 135.0500 yen)

(Reporting by Sam Nussey; Editing by Christopher Cushing)