The Vision Fund has a loss of $32 billion

SoftBank posted a record loss for its Vision Fund as a recent rally in tech stocks has done little to help another difficult year for its flagship investment unit.

The Japanese giant’s Vision Fund segment posted a loss of 4.3 trillion Japanese yen ($32 billion) for the fiscal year ended March 31, compared with a loss of 2.55 trillion yen in the same period a year earlier.

SoftBank had a total loss on investments in its Vision Funds of 5.28 trillion Japanese yen compared to 3.43 trillion yen in the previous year. Despite a rally this year in technology stocks, they are largely still lower than a year ago. The tech-heavy Nasdaq 100 index fell about 11% during SoftBank’s fiscal year.

Overall, SoftBank posted a net loss of ¥970.14 billion for the fiscal year, less than the ¥1.7 trillion loss in the same period a year earlier.

Despite gains from exiting investments in high-profile companies such as ride-hailing firm Uber, SoftBank said it posted losses in areas including the share prices of Chinese artificial intelligence firm SenseTime and Indonesian ride-hailing and e-commerce company GoTo.

Over the past year, SoftBank has exited some of its highest-profile investments to raise money. It reduced its overall losses through the sale of shares in T-Mobile and Alibaba. It continues to offload some of its shares in the latter company via a derivative called a futures contract, after Son made his fortune with an early investment in Alibaba more than two decades ago.

In August, it said it had sold its remaining stake in US giant Uber.

The companies in which SoftBank has invested are well capitalized, according to the Japanese giant’s chief financial officer Yoshimitsu Goto. He said SoftBank has a number of companies ready to go public, which are valued at a combined value of $37 billion. He did not name these companies.

The brainchild of founder Masayoshi Son, SoftBank’s Vision Fund consists of Vision Fund 1 and Vision Fund 2 and invests in high-growth stocks, which have faced headwinds from rising interest rates globally that have prompted investors to sell out of riskier stocks such as technology.

Amid mounting losses, Son’s key ally and top SoftBank executive Rajeev Misra stepped back from some of his roles at the company. Misra was instrumental in the early days of the Vision Fund, which was launched in 2017.

About a year ago, Son said SoftBank would go into “defense mode” amid headwinds and become more disciplined with its investments.

That tactic appeared to be working in SoftBank’s fiscal fourth quarter from January to March, helped by the rally in technology stocks. SoftBank’s Vision Funds recorded investment losses of 236.8 billion yen in the period, compared with 730.3 billion yen in the previous quarter.

SoftBank said it made $3.14 billion in new or follow-on investments in the fiscal year, down from $44.26 billion in the same period a year earlier.

During a press conference on Thursday, Goto said it has been an “unstable” year characterized by geopolitical risks and instability in the financial system, citing the collapse of Silicon Valley Bank and problems at Credit Suisse.

“In the first quarter, we may see some signs of improvement, but we do not expect a fundamental solution … for these problems,” Goto said.

Still, he said artificial intelligence technology is making “dramatic progress” with the company, weighing up whether to stay in defensive mode.

“With situations like that, should we just stay on defense or should we keep a balance with attack?” Goto asked.

Now investors are eyeing the initial public offering of British semiconductor firm Arm, owned by SoftBank, as a way to bolster the Japanese firm’s balance sheet and perhaps give it more cash to make new investments. Last month, Arm confidentially applied for a listing on the US Arm, previously saying it would list in the US rather than the UK, dealing a blow to the London Stock Exchange.

SoftBank agreed to buy Arm in 2016. Goto said he was unable to discuss Arm at length because of the confidential US filing, but said preparations for the IPO are “going smoothly”.

Arm had revenue of 381.7 billion yen in the fiscal year, up more than 27% from the previous year. The company’s pretax income rose 18% year-on-year to ¥48.6 billion.