SoftBank Sees A Boost In Cash Flow

SoftBank is finally seeing a boost in its cash flow after spending billions on investing in other companies.

Founder and CEO Masayoshi Son launched the $100 billion Vision Fund in 2017. Since then, the firm has invested billions in companies, including Singapore-based ride-hailing company Grab, U.S. shared office provider WeWork and ridesharing giant Uber.

Now, the firm is seeing some of those funds come back, including via the $23.5 billion listing of SoftBank’s mobile unit and Japan’s largest corporate bond sale to retail investors. There is also Uber’s highly anticipated initial public offering (IPO) coming up.

Son is so optimistic about the firm’s future that he recently launched a $5.5 billion share buy-back.

“Until now, SoftBank was viewed as a group loaded with debt and doing dangerous things,” Son said in February, according to Financial Times. “In time, all that noise will go away.”

Since the listing of the mobile unit’s stock on Dec. 19, SoftBank shares have increased by 41 percent — the highest it’s been in 19 years.

Richard Kaye, a portfolio manager at French asset manager Comgest, a SoftBank shareholder, said investors are gaining more confidence in the firm, noting that “this could be the beginning of a rather long reassessment by investors of SoftBank’s potential.”

While shares in SoftBank remain undervalued by 40 percent, that could change after Uber’s IPO. SoftBank, which owns a 16.3 percent stake in Uber via the Vision Fund, could find itself with a stake worth nearly $11 billion if the ridesharing giant hits its planned IPO valuation of $91.5 billion.

If Uber’s Chinese rival Didi Chuxing — along with Slack, the workplace messaging app — decides to go public as well, SoftBank will have even more cash on hand.

“The biggest issue SoftBank faces is how they can ensure steady cash flow, since its investments are just going to keep on increasing,” said Satoru Kikuchi, analyst at SMBC Nikko Securities.