By Sam Nussey
TOKYO (Reuters) – SoftBank Group Corp (T:9984) shareholders have an $80 billion (£61 billion) question for Chief Executive Masayoshi Son when he presents the Japanese tech investment giant’s earnings on Monday: Just what will he do with that cash, due in from assets sold since March?
They already know not to look for a key profit measure in SoftBank’s July-September report. SoftBank has dropped operating profit as a core measure after its increasing focus on tech investment left the yardstick buffeted by paper revaluations.
Instead, they want details on Son’s long-term plans for proceeds from divested assets including slashing its stake in its namesake domestic telecoms company and selling chip designer Arm in a yet-to-close deal that when included brings funds from sales agreed since March to the cool $80 billion.
SoftBank already had about $60 billion in cash on its books at the end of June – a big increase for a company with a history of borrowing heavily to finance deals.
The company drew on that to play the stock market in July-September, buying into listed tech firms and equity derivatives. Son in August described the group’s cash as a “defence” against the ravages of the COVID-19 pandemic on the global economy.
U.S. tech stocks rose through the quarter, with buoyant markets also allowing companies in which SoftBank’s $100 billion Vision Fund was invested to take advantage of an accompanying revival of the market for initial public offerings.
Vision Fund’s portfolio, which includes stakes in ride hailing firm Uber Technologies (N:UBER) and hotel booking startup Oyo, was valued below acquisition cost at the end of June.
But in a sign of renewed vigour at SoftBank, Vision Fund is targeting outside investors with a plan to launch a blank check investment company, a source said last month.
SoftBank retains ambitions to build a second giant fund, even after the collapse of earlier fundraising plans has left it investing on a smaller scale with its own cash.
Son is likely to be asked about reports by Reuters and other media that executives have again considered taking SoftBank private due to frustration that the group’s share price doesn’t reflect what they see as its true value, and as its cash pile grows.
Buybacks have helped push SoftBank’s shares to near 20-year highs, giving it a market value of almost $140 billion.
Investors will also want to know more about the Arm sale to Nvidia Corp (O:NVDA), which faces industry opposition and needs regulatory approval in countries including China, where the giant IPO of fintech firm Ant Group ground to a halt after regulators intervened.
SoftBank’s largest asset is its stake in Alibaba Group Holding (N:BABA), which owns about a third of Ant.
“To me that just increased the regulatory risk around the Arm deal,” Kirk Boodry, analyst at Redex Research, said of the intervention.