TOKYO - SoftBank Group, which oversees major operations including telecom company SoftBank and the Vision Fund investment vehicle, has set out an ambitious plan involving over 1 trillion yen in investments since January.
In an interview conducted shortly after the company’s earnings announcement, Chief Financial Officer Yoshimitsu Goto outlined how these large-scale projects will be supported financially.
SoftBank recently returned to profitability for the first time in four years, a headline that attracted media attention. But Goto emphasized that quarterly profits have little bearing on the company’s true value. "As an investment holding company, our valuation comes from the sum of the valuations of our portfolio, not our profit-and-loss statement," he said. Nevertheless, he acknowledged that reporting a profit "does feel good."
In a volatile market environment, Goto underscored that SoftBank’s most critical metric is Net Asset Value (NAV), which reflects the total value of its assets minus liabilities. "It's what we’ve consistently highlighted as the key indicator," he said. "Our focus is not on quarterly earnings but on asset quality and balance sheet stability."
Recent market swings, he added, are not cause for alarm. "We’re not day traders. What matters is the long-term trend in our portfolio growth over the past 20 to 30 years."
Goto also addressed the company’s approach to managing liabilities. SoftBank maintains a leverage policy of around 25%, referring to what he calls the “Loan to Value” ratio. The company is committed to transparency on repayment capacity to reassure both equity and debt investors.
Despite a rise in the valuation of some Vision Fund holdings, SoftBank’s own market capitalization remains about half of its NAV. Goto attributes this gap to two main factors. First, many of the assets in Vision Fund remain unlisted, making them difficult for investors to evaluate. Second, investors still have limited visibility into SoftBank’s overall investment strategy.
Goto acknowledged that full transparency is not always possible. "There are strategic elements we can't reveal — our 'secret sauce,' so to speak. Even companies like Coca-Cola don’t disclose how they make the syrup."
The resulting information gap, however, tends to deepen the discount in market valuation. "Closing that gap is something we work on, but simply buying back shares isn't a structural fix."
SoftBank has already conducted around 5 trillion yen in share buybacks over the past five years, among the largest in Japan. However, Goto stressed that buybacks are not a cure-all. "Capital allocation must prioritize growing asset value through new investments."
That said, the company continues to weigh capital allocation options: share buybacks, debt reduction, or reinvestment. "Right now, we’re leaning toward new investments," Goto said, pointing to recent large-scale projects underway.
The challenge lies in balancing growth, shareholder returns, and financial safety — a core issue at the heart of management decisions. Given the scale of investment needed, Goto said that maintaining a robust balance sheet is critical. "Our leverage strategy demands that we put financial stability above all else."
SoftBank is expected to further outline its investment roadmap in the coming months, with Goto hinting at more efforts to communicate strategy and asset value to investors. "To build confidence, we must demonstrate that our asset value will keep rising."
Source: テレ東BIZ
