Status of Implementation of Share Price-Conscious Management
Assessment of current conditions
As a strategic investment holding company, our aim is to maximize corporate value through sustained growth in NAV (net asset value, calculated as equity value of holdings – adjusted net interest-bearing debt). To increase NAV, we consistently engage in “recycling of investments” through SoftBank Vision Funds.*1 This process consists of investing in high-growth AI-enabled companies that can lead their respective sectors, enhancing the equity value of these companies, exiting investments at the opportune time, and reinvesting the funds recovered into new companies with strong growth potential. In addition, we also make large direct strategic investments, such as our acquisition of Arm, a leading semiconductor intellectual property (IP) company, in September 2016. Through such direct investments, we are closely involved in management and business strategies of these companies to drive increases in equity value. When making investment decisions for any of these types of investments, we comprehensively evaluate the potential to generate adequate investment returns, considering factors such as market size, competitive landscape, business model, business strategies, and the management team’s enthusiasm and talent.
SoftBank Vision Fund 1, SoftBank Vision Fund 2, and SoftBank Latin America Funds
We consider NAV, which captures our fair net asset value as a strategic investment holding company, to be the best indicator for gauging our enterprise value, rather than consolidated net assets or indicators based on periodic profit or loss. We believe that comparing our NAV per share to our share price provides the appropriate perspective for market assessment. NAV per share can be thought of as our liquidation value, and in theory a company’s share price as a going concern should be expected to exceed NAV per share (before taxes). However, we have been experiencing a persistent “NAV discount” in recent years, where our share price remains significantly below our NAV per share. This discount is attributable to several factors: (1) our growth story is not compelling to shareholders and other investors due to the weak investment performance of our portfolio, particularly that of SoftBank Vision Funds; (2) there is a perception that the equity value of our holdings, especially private assets, may decline further; (3) uncertainties exist regarding Arm’s equity value upon its IPO and the timing of the IPO, primarily due to ongoing pressure in the semiconductor market; and (4) shareholders and other investors find us “difficult to understand,” due to the complexity of our diverse investment assets, group structure, and fund procurement methods.
|March 31, 2019
|March 31, 2020
|March 31, 2021
|March 31, 2022
|March 31, 2023
|Share price (JPY)
|NAV per share (JPY)
|NAV discount (%)
Please find the definition of NAV per share here.
Policies and measures to alleviate the NAV discount
To narrow the NAV discount and eventually achieve an NAV premium, where the share price incorporates future growth expectations and exceeds NAV per share, we must first address the discount factors mentioned above. While SoftBank Vision Funds will continue to take a defensive stance in light of the current market environment, we will continue to make investments that drive the Information Revolution and strive to increase the visibility of our growth story to shareholders and other investors. Regarding Arm’s IPO, in April 2023 Arm announced that it has confidentially submitted a draft registration statement on Form F-1 to the U.S. Securities and Exchange Commission relating to the proposed initial public offering of American depositary shares representing its ordinary shares (press release). We will provide updates on Arm’s IPO when significant progress is made. Furthermore, we will continue to actively engage in thorough dialogues with shareholders and other investors to foster understanding and address inquiries, as well as to further refine our disclosure materials.
In addition, we will conduct share repurchases flexibly, while adhering to our financial policies regarding LTV and cash position and taking into account factors such as investment opportunities for sustained growth and the extent of NAV discount. Most recently, we repurchased JPY 1.4 trillion in shares in accordance with Board of Directors resolutions passed in November 2021 and August 2022. Cumulatively, share repurchases have reached JPY 4.5 trillion since the fiscal year ended March 31, 2019 (including the most recent repurchases of JPY 1.4 trillion).