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SoftBank seen returning to profitability as listed holdings rise

TOKYO (Reuters) - SoftBank Group Corp 9984.T is seen returning to profitability in the first quarter on Tuesday as the value of its listed holdings rise, three months after faltering tech bets via its Vision Fund pushed the group to a record annual loss.

The Japanese conglomerate will likely record operating profit of 171 billion yen ($1.62 billion) for April-June, showed the average of three analyst estimates compiled by Refinitiv. That would represent a 75% drop from the last time it made a quarterly profit, in April-June last year.

The performance of the $100 billion Vision Fund’s public assets is likely to return SoftBank to profit, said analyst Kirk Boodry at Redex Research.

Positive news include insurance startup Lemonade Inc's LMND.N successful July listing. Food delivery service DoorDash has also filed for a listing, testing the market's appetite for money-losing startups.

Analysts grapple with uncertainty over how the Vision Fund values its portfolio. The fund recorded a 1.9 trillion yen operating shortfall in the year ended March as Chief Executive Masayoshi Son’s bets on startups such as shared office space firm WeWork went awry.

GRAPHIC: SoftBank and the Vision Fund tmsnrt.rs/39YQo2j

Son has pivoted as plans faltered, jettisoning satellite operator OneWeb and launching a share buy-back funded by asset sales to support SoftBank’s share price.

The group has sold down stakes in e-commerce firm Alibaba Group Holding Ltd BABA.N and wireless carriers SoftBank Corp 9434.T and T-Mobile US Inc TMUS.O.

It is also looking at selling chip designer Arm, media reported, in a possible break from a firm Son praised as closely aligned with his vision but that has turned money losing under his watch.

SoftBank has struggled to attract capital for a second mega-fund given poor performance of the first and so has been investing its own money.

“With the amount of assets that have been sold, the next logical step is to move forward on Vision Fund 2,” Boodry said.

The value of SoftBank’s assets has returned to pre-coronavirus levels, Son said in June, referring to his preferred measure of success.

Reporting by Sam Nussey; Editing by Christopher Cushing

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