Japanese banking giant SoftBank is known for bringing value to its shareholders consistently, but according to analysts, the bank is only going to record a marginal growth in profits for the quarter that ended in March this year. However, it is SoftBank’s $100 billion Vision Fund that is of more interest to many investors, who feel that the bank should look to cash in on it through an initial public offering (IPO). Considering the fact that the Vision Fund has stakes in some of the biggest tech startups in the world, it could prove to be a masterstroke on the part of the bank.
Although SoftBank has not made an actual projection of its earnings for the quarter, analysts believe that the group is going to post a profit of 156.1 billion Yen for the quarter and that would reflect a 1% rise in profits year on year. Needless to say, it is a disappointing return. Last year, the bank floated shares for its telecommunications company, but it is believed that the management is considering how it could list the Vision Fund. At the end of the day, it is the banks biggest source of income and listing it could unlock enormous value.
As regards to Vision Fund, it is the world’s largest private equity fund that invests in tech startups and is backed by the Saudi Arabian state. Last year the fund got its fair share of flack for its association with the Saudis after the assassination of Jamal Khashoggi. However, the point remains, that has stakes in some of the most promising tech startups in the world like Uber and WeWork among others. Uber is going to have the biggest IPO in Wall Street history which would give it a valuation of $90 billion and WeWork is also set to have its IPO soon. If those IPOs are successful, then it could take the valuation of the assets under the Vision Fund to new highs and therein lies the lure of an IPO. However, the tech industry is also going through a bit of churn, and it has also emerged that Sequoia Capital is going to let 20% of the staff in its investment arm go. That does not exactly bode well for the industry at large, but the Uber IPO could be one of the landmark events for SoftBank and the Vision Fund. The company has had big winners in the past, but this is going to be its first IPO.