SoftBank on Wednesday reported a record 4.03 trillion yen ($36.99 billion) Vision Fund unit profit from a fourth-quarter investment gain on Coupang, putting it among the world's biggest earning firms a year after an unprecedented loss.
Group net profit was 4.99 trillion yen ($45.88 billion) in the year ended March, topping the $42.5 billion made by Warren Buffett's Berkshire Hathaway in its last business year. The annual profit is the largest posted by a Japanese company to date, according to reports from The New York Times and Wall Street Journal.
It also compares with a 962 billion yen loss a year earlier after teetering tech bets depressed the value of Softbank's portfolio.
"It's clearly validation of Masa's thesis," Navneet Govil, Vision Fund's chief financial officer, told Reuters in an interview, referring to company founder and CEO Masayoshi Son.
Market enthusiasm for tech stocks drove the public listing of SoftBank-backed e-commerce firm Coupang and used-car trading platform Auto1 Group and the rising share price of ride-hailing firm Uber during the quarter.
To sustain Softbank's position among the global corporate elite, Son will have to replicate that fourth-quarter performance with other yet-to-list companies in the Vision fund portfolio. Son has likened that to laying golden eggs.
Candidates including ride-hailing firm Didi, TikTok owner Bytedance and truck service platform Full Truck Alliance have strong revenue growth, healthy market share and a clear path to profitability, according to Govil.
These companies are "sizeable investments with significant value to be unlocked," he said.
Much of Vision Fund's gain, however, is on paper with the value of the portfolio locked up in the stock market amid concern over frothy valuations and a boom in special purpose acquisition vehicles (SPACs) which has drawn regulatory scrutiny.
The total fair value of the first $100 billion Vision Fund and the smaller second fund was $154 billion at the end of March, with SoftBank distributing $22.3 billion to limited partners.
SoftBank has hiked its committed capital in the second fund to $30 billion from $10 billion, reflecting the breadth of investment opportunities, Govil said.
Son said he may consider inviting third-party money into Vision Fund 2.
Two of SoftBank's highest-profile bets, space sharing firm WeWork and ride-hailing firm Grab, have outlined plans to list via SPAC mergers, with Vision Fund reportedly in talks to use its own such vehicle to list portfolio company Mapbox.
The Grab deal offers further upside for the Vision Fund should the transaction go through, Govil said.
The group's trading arm, SB Northstar, is expanding dealmaking this week leading a $1 billion investment in acquisitive e-commerce firm THG.
SB Northstar and the broader group recorded a 233 billion yen loss on investments in listed stocks and derivatives as efforts to work cash reserves outside the Vision Fund sputter.
SoftBank has completed a 2.5 trillion yen buyback program launched last year which pushed the stock price to two-decade highs in March. The end of the buyback pulls support at a time when shares are sliding in line with weakness in U.S. tech stocks.
—CNBC contributed to this report.