(Bloomberg) — India’s hot equity selling market is delivering gains for Japanese technology investor SoftBank Group Corp. after the company’s stock suffered from disappointing earnings and a reality check in the artificial intelligence space.
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Three SoftBank-backed companies have had solid initial public offerings in Mumbai over the past week. Shares of e-scooter maker Ola Electric Mobility Ltd., the largest of the IPOs, have risen more than 60 percent. Shares of software maker Unicommerce eSolutions Ltd. have already risen more than 80 percent, while shares of baby products retailer Brainbees Solutions Ltd. have gained about 40 percent.
More successful IPOs could give Chief Executive Masayoshi Son money for his planned large-scale foray into the AI and semiconductor industries. The company has built up a huge cash hoard while the value of its assets has soared along with the share price of its chip subsidiary Arm Holdings Plc.
“You’re going to see a lot more IPOs of our fund globally, like you saw in India,” said Alex Clavel, co-managing director of SoftBank Investment Advisers, in an interview. “We may have sold a little bit in those IPOs, but we are fully invested in those companies,” he added.
The Vision Fund has been actively helping Son find deals for SoftBank’s next chapter. “We will evolve with technology,” Clevel said. “The intention is to have our people working on fund transactions globally as well as SoftBank Group transactions to support the parent company.”
The Indian IPOs are a positive sign after its Vision Fund segment posted a 204.3 billion yen ($1.4 billion) loss in the June quarter, weighed down by writedowns on a portfolio of young, loss-making technology companies. It also offers relief after SoftBank’s earlier disappointments in India with bets on payments company Paytm and logistics provider Delhivery Ltd.
SoftBank shares have rebounded this week, but are still 30% below their July all-time high following the company’s latest results and the general market sell-off. Investor optimism about AI and chips is showing signs of waning after driving up shares of Arm and its parent company.
The Tokyo-based investment firm has made a total of $155 million by selling some shares in the three recent Indian IPOs, according to Bloomberg calculations based on company disclosures. While it will take some time for SoftBank to realize further gains on the shares it still holds due to mandatory lock-up periods, the investments are off to a good start.
The Indian market is teeming with big IPOs. Ola raised about $733 million in the country’s biggest IPO in about two years, and investors are eyeing the planned record $3.5 billion IPO of Hyundai Motor Co’s local unit in the coming months.
Among the companies in SoftBank’s portfolio preparing for an IPO is food delivery app Swiggy Ltd., which has filed a draft offer with India’s markets regulator. The Vision Fund is also backing Oyo Hotels’ parent company Oravel Stays Ltd., whose plans for an IPO in Mumbai have hit setbacks.
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