Investor Relations

CFO Message—SoftBank Group Report 2022

We Will Adhere to Our Financial Policies Even
in Unstable Conditions. For the Time Being,
We Will Practice Prudent Capital Management
and Take a More Conservative Approach.

Board Director, Corporate Officer, Senior Vice President, CFO & CISO
Head of Finance Unit
Head of Administration Unit
SoftBank Group Corp.

Board Director, Corporate Officer, Senior Vice President, CFO & CISO, Head of Finance Unit, Head of Administration Unit
SoftBank Group Corp.

Yoshimitsu Goto

Biography →

Change in external environment

An awareness of macroeconomic dynamics is critical for all investment companies. Even in the context of the past 5–10 years, we have just experienced a year of significant developments in the global environment. In the U.S., monetary policy is being tightened to counter inflation, leading to ongoing increases in interest rates, while oil prices continue to soar amid heightened geopolitical risks associated with Russia’s invasion of Ukraine. These developments have had a significant impact on the stock market across the board with the NASDAQ Composite Index and the S&P 500 declining since the beginning of 2022. In addition, the NASDAQ Golden Dragon China Index, which consists of Chinese stocks listed in the U.S., has fallen by half over the past year due to changes in policy and regulations in both the U.S. and China.

Under these conditions, the value of SBG’s equity holdings declined significantly to ¥23.2 trillion as of March 31, 2022, from ¥30.4 trillion a year earlier. However, had this change in the financial market occurred three years earlier, when Chinese stocks accounted for around 70% of our investment portfolio, our equity value of holdings would have declined even further. As we have continued to diversify our portfolio, the weighting of Chinese stocks in our portfolio has decreased, leading to a comparatively smaller decline. We also issue corporate bonds, but the bonds outstanding are fixed rate and thus not affected by the rising interest rates in the U.S. That said, some of our portfolio companies have business models that are directly affected by interest rate trends, and we need to take a careful approach to mitigate the impact. However, such companies make up only a small portion of our overall portfolio.

Meanwhile, in the capital markets, we see an ongoing risk-off sentiment. This uncertainty looks to be here to stay due to rising geopolitical risk and policy developments in China, as well as monetary policy trends in other countries. Therefore, over the next 6–12 months, we will closely monitor risk factors, be prepared for further downside and continue to practice prudent management and take a more conservative approach.

Fiscal 2021 summary: Adhering to our financial policies, we continued to invest steadily and deliver returns to shareholders

In fiscal 2021, we steadily invested and delivered returns to shareholders, while continuing to firmly adhere to our financial policies amidst unstable market conditions.

Adherence to financial policies

Our financial policies reflect our long-standing pledge to investors and have not changed. We will continue to adhere to three key financial policies: operating at an LTV of below 25% in normal times (with an upper threshold of 35% even in times of emergency); retaining funds to cover at least two years of bond redemptions; and securing continuous dividend income from SVF1, SVF2, and other subsidiaries. Our LTV as of March 31, 2022, was 20.4%, providing us with sufficient financial buffer. Our cash position was ¥2.9 trillion,*1 which, given our bond redemption schedule over the next two years, is well in excess of our liquidity requirement.


NAV, the most important indicator in evaluating SBG as an investment company, stood at ¥18.5 trillion as of March 31, 2022, reflecting a decline in the share prices of listed portfolio companies. Over the long term, we expect NAV to fluctuate but trend higher. That said, our current NAV per share is far greater than SBG’s share price. Closing this gap remains a key agenda for management.

Financial activities

We were able to continue to raise funds under our stable financial management approach. We fully leveraged the value of owned assets utilizing our equity stakes in Alibaba, Arm, T-Mobile, and Deutsche Telekom, to raise a total of $22.3 billion (net) in fiscal 2021. Most notably, in March 2022, we raised $8.0 billion in capital by using unlisted Arm shares. In fiscal 2021, we redeemed totaling ¥1.2 trillion*2 ($10.8 billion)*3 of corporate bonds and raised ¥2.3 trillion ($20.2 billion)*3 from the market, for a net amount of approximately ¥1.0 trillion ($9.4 billion)*3 after accounting for redemptions. This was accomplished by issuing of a full range of corporate bonds in Japan and overseas, including senior, subordinated, and hybrid bonds, while at the same time, meeting the needs of those investors who are expecting the bonds to be rolled over.

Investment activities

We exited investments while pursuing new investments, leading to further diversification of our portfolio. We also continued to buyback our shares. In conclusion, we accomplished what we wanted to achieve.

With the environment still favorable in the first half of fiscal 2021, we invested a combined $44.2 billion at SVF1 and SVF2 and $4.3 billion at the SoftBank Latin America Funds, which represents a cumulative total of nearly $50.0 billion over fiscal 2021. However, starting in the third quarter, as the stock market began to deteriorate, we significantly reduced the speed of new investments. In response to changes in the financial environment, we took flexible and agile measures to manage LTV levels. Our management shares the view that we must adhere to our financial policies regardless of the macroeconomic environment. Our CEO and finance team engaged in meaningful discussions and decided on priority measures to take, and steadily implemented those measures, which allowed us to reaffirm our financial security. We also made steady progress in the sale and monetization of investments and distributions from fund operations, with a total of $15.2 billion in distributions received from SVF1 and SVF2. These distributions, together with our asset-backed finance and cash positions, provided sources of funds for reinvestment in our investment fund businesses.

We are also mindful of the diversification of our portfolio. As of March 31, 2022, Alibaba shares accounted for approximately 23% of our total holdings, a significant reduction from more than 60% in the past. On the other hand, SoftBank Vision Funds increased their weighting in our portfolio. The number of investments in our investment fund business increased to 475,*6 reflecting good progress in the diversification of our portfolio.

Further portfolio diversification

Breakdown of equity value of holdings (excluding asset-backed finance)

Breakdown of equity value of holdings (excluding asset-backed finance)

In November 2021, we announced a share buyback program of up to ¥1.0 trillion over a one-year period. We are executing this program in a flexible manner, in consideration of factors such as new investment opportunities and NAV discount level, among others, while strictly adhering to our financial policies. As of June 30, 2022, eight months after the announcement, we had bought back shares totaling ¥638.1 billion, an indication of the steady progress of the program.

Fiscal 2021 investment and recovery cycle

Fiscal 2021 investment and recovery cycle
  • Note: Converted at the average exchange rate of each quarter.

  • *1 This figure refers to cash and cash equivalents + short-term investments recorded as current assets + undrawn commitment line (which stood at ¥124.7 billion as of March 31, 2022) on a stand-alone basis for SBG (excluding SB Northstar).

  • *2 See “Redemption of corporate bonds” on page 120 and “Proceeds from issuance of corporate bonds” on page 119.

  • *3 Converted using the average exchange rate of each quarter.

  • *4 Includes distribution to the SVF1 incentive scheme ($1 billion).

  • *5 Includes financing through prepaid forward contracts and margin loans (net).

  • *6 As of March 31, 2022 (May 6, 2022, for SVF2 only). Includes fully exited companies and 15 companies that are post-investment committee approval but pre-investment closing.

Responding flexibly to macroeconomic dynamics while adhering to our financial policies

Amid a persistently uncertain investment environment, in fiscal 2022 we will pursue two pillars of our financial strategy: adherence to our financial policies, and flexible and agile financial management able to respond to any changes. We believe that the right thing to do is not to change our financial policies. No matter how the environment changes in the future, we will adhere to the three financial policies mentioned earlier.

As an investment company, over the past few years we have firmly established a cycle of investment, followed by monetization and reinvestment. Let us look back at the past two years. In fiscal 2020, we conducted a large-scale share buyback and strengthened our balance sheet using funds obtained from our ¥4.5 trillion monetization program completed amid deteriorating market conditions due to COVID-19. This resulted in an LTV of 12.2% at the fiscal year-end. In fiscal 2021, we made new investments and bought back additional shares by using funds generated through distributions and monetization from our investment fund business. Despite deteriorating market conditions, we ended the year with an LTV of 20.4%. As mentioned earlier, as we continue our cycle of investment /monetization / reinvestment, we must continue to operate prudently and respond flexibly and nimbly to any changes in the external environment while assessing risk factors and being prepared for further downside.

In February 2022, we announced the termination of the agreement to sell Arm to NVIDIA Corporation, and the preparations for a public listing of Arm, with careful consideration being taken to the best timing for the IPO. Positioning ourselves as a “Vision Capitalist for the Information Revolution,” we have long supported, through our investments, IT- and AI-driven companies that we believe will succeed in the future. By creating a new ecosystem revolving around Arm that provides core infrastructure for IT and AI, we will be even better positioned to lead the Information Revolution. Since our acquisition of Arm, the company has made good progress with R&D and grown substantially, posting adjusted EBITDA*7 of $1.0 billion in fiscal 2021. Accordingly, we believe that pursuing a listing at this stage will be beneficial for us and our shareholders. Following a successful re-listing, the proportion of our equity value of holdings represented by listed shares would increase, which we also expect would positively impact our credit rating.

Financial management policy for fiscal 2022 (illustrated)

Financial management policy for fiscal year 2022 (illustrated)
  • *7 Derived from financial information based on, but not necessarily fully compliant with, IFRS. Subject to change as unaudited and provisional.

Stepping up essential ESG initiatives

In fiscal 2021, we further advanced our ESG initiatives. We began by establishing a Group policy on ESG areas of high importance to SBG. Some of our major Group companies are independent, publicly listed companies with their own policies. While understanding and respecting such policies, we established a new Environmental Policy and Supplier Code of Conduct to clearly state our policies as a Group. We will continue actively developing Group ESG policies going forward.

We also promote ESG initiatives in our investment business. Many of our portfolio companies are already working to address climate change, recycle resources, ensure diversity and inclusion, and eliminate inequality and discrimination. We believe that an important challenge for the future is how to integrate ESG seamlessly into our investment criteria. Companies that lack an ESG perspective are more likely to deliver poor growth over the medium to long term, so investing in such companies could adversely affect our investment performance. It is important that we address social needs head on. We will not simply incorporate ESG into our investment criteria; we will continue to monitor the ESG efforts of those companies we choose to invest in and engage with them as necessary.

With respect to the environmental (E) aspect of ESG, in June 2022 we disclosed information in line with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), along with the Group’s greenhouse gas emission reduction targets. SBG has already achieved Carbon Neutrality, and several major subsidiaries have set their own targets. We will continue working together as a Group to promote these initiatives.

Regarding the social (S) aspect of ESG, we are stepping up efforts related to human rights, including identifying human rights risks. We have also remained proactive in addressing the spread of COVID-19. For example, we conducted a nationwide vaccination program and developed a “mobile PCR testing vehicle.” Another focus is human capital, which is becoming more important these days. We believe that continuously improving the quality of our human resources will drive our future growth – people are the most valuable form of capital in the investment business. For this reason, we help all individual employees to enhance their skills and become global talent.

As for the governance (G) aspect, the Board of Directors, which is the core of SBG’s governance, includes global corporate executives and top-notch academics with highly diversified skillsets, as evidenced by the Board’s skills matrix. Another feature of our Board is its independent directors, who account for more than 50% of members.

While these activities have already been highly rated by third-party ESG evaluation organizations,*8 we plan to further enhance our essential initiatives. We will continue to promote ESG to enhance our vision while considering social demands and making sure for continuous improvements.

  • *8 See page 39 for the external evaluations of sustainability.

  • As of June 24, 2022, Yotaro Agari, Global Head of Investor Relations, was appointed as Chief Sustainability Officer and Head of the Sustain-ability Department.

  • “SoftBank Group Report 2022” is available on July 27, 2022.

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