SoftBank investors focus on Arm IPO at Q4 earnings

By Sam Nussey and Kiyoshi Takenaka

TOKYO (Reuters) – SoftBank Group Corp reports earnings on Thursday amid an uptick in some stocks held by its Vision Fund unit, and with the market thirsty for details on its upcoming listing of Arm aimed at bolstering the investment company’s balance sheet.

The fourth-quarter earnings come after the Vision Fund unit posted four consecutive quarters of investment loss, with investors debating whether the value of privately held stakes have further to fall.

“The public side did well but questions linger about the private side because we don’t have a lot of visibility on that,” said analyst Kirk Boodry at Astris Advisory Japan.

“They have some cushion to have writedowns,” he said.

Portfolio firms of the Vision Fund unit whose shares climbed during January-March include e-commerce firm Coupang Inc and robotics firm AutoStore Holdings Ltd.

Fallers include office sharing company WeWork Inc.

SoftBank filed with regulators confidentially for a U.S. listing of chip designer Arm last month through which it is seeking to raise $8 billion to $10 billion later this year, Reuters reported previously.

A buoyant listing would bolster CEO Masayoshi Son’s investing credentials, and provide an important capital injection for his group which has scaled back investing activity after its portfolio was battered by falling tech valuations.

SoftBank has been reducing its stake in Chinese e-commerce giant Alibaba (NYSE:) Group Holding Ltd to raise capital.

“The earnings are not very meaningful. What matters is Arm for SoftBank to demonstrate it can get results as an investment company,” said SMBC Nikko Securities analyst Satoru Kikuchi.

Semiconductor stocks were hit hard during a market rout last year but have since rebounded, with the Philadelphia SE Semiconductor Index up 17% year-to-date.

Shares in chipmaker Nvidia (NASDAQ:) Corp, whose bid to buy Arm foundered on regulatory opposition, have almost doubled this year.

Still, SoftBank executives are unlikely to offer meaningful new information about the Arm listing on Thursday, Kikuchi said.