SoftBank’s Bets On OYO, Flipkart In India Pay Off With $2.7 Bn Gain In FY 2019

In 2017, SoftBank reported a combined loss of $1.4 Bn on two of its Indian bets, Ola and Snapdeal. However, the failure of Flipkart-Snapdeal merger deal did not deter SoftBank from investing more in the country. Overall, the company has invested around $10 Bn so far in Indian startups. And looks like some of those bets, including OYO, are now paying off for the Japanese conglomerate.

SoftBank has witnessed an 80% year-on-year growth in its operating income for FY 2019. The Masayoshi Son-led company attributed this growth to an unrealised gain of about $12.5 Bn ( or ¥1,378.6 Bn) from its investments in ride-hailing company Uber, Indian hospitality company OYO and other portfolio companies.

Overall, its investments in Flipkart and OYO paid off with a gain of $2.7 Bn, split between realized and unrealised gains.

The sale of SoftBank’s share in the Indian ecommerce giant Flipkart resulted in a gain of  $1.3Bn (¥146.7Bn ) for the Japanese company. Flipkart was acquired by Walmart for $16Bn in August 2018. OYO’s valuation has increased to $1.4Bn (¥154,189 Mn) in FY 2019.

Curiously, there was no mention of Ola Cabs or its parent ANI Technologies in the financial report.

Other key points to note from SoftBank’s announcement are:

• SoftBank Vision Fund and its sister entity Delta Fund contributed to the operating income of $11.4 Bn (¥1,256,641Mn) in FY 2019, as compared to $2.7 Bn (¥302,981Mn) in FY 2018.
• The sale of SoftBank’s share in American technology company NVIDIA also contributed to the overall operating income in FY19
• SoftBank Vision Fund and Delta fund holds 69 investments at a cost totalling $60.1 Bn, with valuations amounting to $72.3Bn (excluding exited investments)
• OYO’s valuation has increased to $1.4Bn (¥154,189 Mn) in FY 2019. While, Uber’s valuation stood at $3.8Bn (¥418,140 Mn), accounting for the company’s market expectations, and the anticipated initial public offering (IPO) launch this month

During this fiscal year, two companies SoftBank invested in – Guardant Health and Ping An Good Doctor – became publicly listed issuers. While three other portfolio companies – Uber, WeWork, and Slack – filed for their initial public offering documents.

SoftBank Vision Fund In India

The technology-focused SoftBank Vision fund was set up in 2017 with a total corpus of $100Bn. Most of this vision fund was raised from Saudi Arabia and Abu Dhabi. Earlier this month, SoftBank was said to be in talks to launch an initial public offering of its $100 Bn SoftBank Vision Fund. Some of SoftBank’s key investments in India include Ola, OYO, Hike, Paytm, FirstCry, Grofers, Delhivery, Automation Anywhere, and Paytm Mall.

Last month, OYO has partnered with SoftBank to begin its hotel operations in Japan. OYO Hotels Japan G.K will be formed through a joint venture with Tokyo-based SoftBank Corp. and SoftBank Vision Fund.

At the same time, another portfolio company of SoftBank, Indian ride-hailing startup Ola was reported to be distancing itself from SoftBank, to limit the influence of SoftBank Vision Fund in its boardroom. SoftBank is the largest investor in Ola and has been reportedly pushing to facilitate a merger between Ola and global ride-hailing company Uber, which is also a SoftBank portfolio company.

During his visit to India in April 2018, CEO Son had reiterated his commitment to invest further in the Indian landscape. Sharing his vision for SoftBank’s portfolio, he said, “Making local companies go global while global to go local’.