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SoftBank Announces Buyback on Shares Post Profits

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SoftBank Group Corp, Japan, announced a $5.5 billion (approximately Rs. 3,900 crores) share buyback since they reported a 60 percent rise in their quarterly operating profit which was backed up by a rise in the valuations for their technology investments.

The company went on to announce that they would repurchase 112 million shares which were worth JPY 600 billion ($5.5 billion) in the next 11 months, i.e about 10.3 percent of their total outstanding shares, which excluded the treasury stock.

The buyback came after SoftBank Group raised a whopping 2.35 trillion yen in December with the help of listing about one-third of their shares in domestic telco SoftBank Corp, and on Tuesday, this reportedly witnessed a 24 percent jump in its quarterly operating profit.

SoftBank Group said that their operating profit in the October-December quarter had been JPY 438.3 billion (approximately Rs. 28,000 crores or $3.99 billion) whereas it was JPY 274 billion in the last year.

Profits at SoftBank Group are increasingly affected by the valuations of big technology bets through its own investing activities and its Saudi-backed Vision Fund, which launched last year with over $90 billion in the capital.

By the end of the October-December period, the Vision Fund ended up investing $45.5 billion in 49 firms, and this included assets in ride-hailing firm Uber shared workspace provider WeWork Cos, semiconductor maker Nvidia and chip designer ARM – which are valued at $55.3 billion that were transferred from SoftBank Group.

In an announcement, Sanford C. Bernstein analyst Chris Lane said that- “The exact manner in which SoftBank determines the value of its investments has remained murky. Without a ‘down round,’ we are in doubt whether any of the unlisted investment could be revalued.”

Stakes in the Chinese ride-hailing firm Didi Chuxing, which has been backed by SoftBank Group, has traded at prices that imply a valuation of $40-44 billion. WeWork’s higher valuation has been based on an additional investment by SoftBank Group, which injected more than $10 billion into their office-sharing firm which is running under a loss currently and is currently valued at $47 billion.

A successful IPO by Uber is being expected to be on the list this year, and this could help bolster Vision Fund’s strategy and serve as a model for other portfolio companies. SoftBank Group shared their closed up prices of 0.6 percent right before the earnings were announced.

The technology and telecoms conglomerate hasn’t yet released a forecast for this current business year, stating reasons as too many “uncertain factors”.  not release a forecast for the current business year, saying there were too many uncertain factors.

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