SoftBank Group Corp
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SoftBank Group Corp
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Thank you very much for waiting, everyone. Now we would like to start the SoftBank Group Corp. Earnings Results Announcement for the 3-month period ended June 30, 2021.
First, I would like to introduce today's participants. From left, we have Masayoshi Son, Chairman and CEO of SoftBank Group Corp.; Yoshimitsu Goto, Board Director and CFO; Kazuko Kimiwada, Senior Vice President and Head of Accounting Unit. Today's announcement is live broadcast over the Internet.
Now I would like to invite Mr. Son, Chairman and CEO, to present you the earnings results and business overview of SoftBank Group Corp. Mr. Son, please?
This is Son speaking. Thank you very much for your time today.
Around the world, COVID-19, it's still increasing. Vaccination has been increasing -- number of vaccination has been increasing. However, the pandemic status itself is still in difficult status, therefore, that -- I think we are still in attention to see the status, but I would like to share with you our results and overview today.
Looking at the roles difficulty, I believe that this is a kind of a once in 100 years type of a disaster. But when it comes to information revolution area or AI-revolution area, when the circumstance does not allow you to see people or seeing each other in person, we -- this revolution can provide you online entertainment, online communication and actually, this momentum has accelerated because of this pandemic. So immediately after we start seeing the surge of COVID-19, we were, of course, in difficult situation. However, looking back about a year or so for our industry, for our sectors, I believe that the evolution of such revolution has accelerated, which had some means -- or a meaningful year for such an industry.
Now let me go into the presentation. Last -- excuse me, 2 months ago that we had held our Annual General Meeting for shareholders. And there, I have also presented what is SoftBank Group, what we do. What do we do? In the past, as an operating company, we've been providing mobile phone service and some other businesses. So -- and some people told me that, "Mr. Son as an operator -- or the operator of the business, I like you. However, you -- as an investor, I don't like you." There are -- such a comment I have received. However, I believe that was also the one moment we needed to look us once again what are we? What do we do? So I would like to say we are not the investor, we are vision capitalist. That's something that I have mentioned at the Annual General Meeting of Shareholders.
So investors and capitalists sounds similar, however, it's not exactly the same. Investors, actually, only seek for the gain and that's also the most important things for investors. However, capitalist create a revolution. And to create a revolution, when an inventor needs to be there to create such a revolution, and we share the vision with such inventor, and we take a risk from the capital point of view. That, I believe, is the vision capitalist. So that's not creating money, that's creating future. That, I believe, is the most important meaning for SoftBank to operate on business here.
And here, I would like to show you, how much are we investing as a capital -- vision capitalist. Since the inception of Vision Fund, we have spent about 4 years. In the past for -- these 4 years. So since 2017, we have invested several unlisted AI companies. So there are many unlisted AI companies who will try to raise money in the global market. So whenever they try to raise money, actually, we have invested about 10% in -- out of such money that raised by unlisted AI companies. So I believe taking about 10% of capital raised by unlisted AI companies worldwide, I think it's easy to say -- but actually, I would say this is the biggest vision capitalist among the world. That is what the SoftBank Group is.
When it comes to the second and third compared in this calculation, I would say they are much smaller than we have invested. In Japanese companies, number of companies who can call it -- themselves as a world #1. There are many industries out there, but I believe there are fewer companies who can call themselves as a world #1. But I would say we can call ourselves -- here, I believe, is the most important thing that we can call it, a 10% provider of the capital raised by unlisted AI companies worldwide because AI revolution will be 100% important in 10 years, 20 years, for sure that this is going to be increasing.
I am so confident because when we see -- we saw the launch of Internet revolution, which was about 25 years ago, back then there are many people questioned that, "Are we going to see the surge of Internet revolution?" And -- but then -- again, that I would say that I am confident that the Internet revolution will increase and enhance. In that time that I have already started my investment in Internet-related businesses and companies. And here comes the same question. If you ask for the coming 10 years, 20 years, are we going to see the increase of the enterprise value of AI companies? Are we going to see increase in AI revolution? Here, again, I would say I'm so confident that this is going to be growing from bottom of my heart.
And in this industry, in this sector, we would like to be playing the most important role. And the majority of the company that we're investing are not recording profit yet. Of course, compared to our acquisition cost that we've been seeing, the gain, however, each individual company are not yet recording profit because they are just a starter and knowing the risk there, but still, we are so confident that this revolution will grow. That is why that -- we are taking the risk in such area, that's our position as a vision capitalist.
For your information, companies that we are investing, weighted average-wise, I would say, 20%, about -- we are about -- investor of about 20%. So we are not investing all of the AI companies around the world, but we are investing -- out of the -- all AI companies, we are investing about half of them. And in average, I will say, we are 20% shareholder of such. As a result, we believe that the -- providing 10% of capital raised by unlisted AI companies worldwide.
Now let me go into the consolidated results. Last year, first quarter, saw it was about JPY 1.2 trillion net income. This quarter, JPY 761 billion. So it's a -- quite a large decrease. Although that there is a decrease, but the last year first quarter, JPY 1.2 trillion was made up with JPY 1.1 trillion of the Sprint-T-Mobile merger. And as a result of such merger, we had a onetime gain from Sprint. And also, we have another onetime gain related to Sprint-T-Mobile merger, which was accounted for about JPY 1.1 trillion out of JPY 1.255 trillion. So this was largely from the onetime gain from the Sprint-T-Mobile merger.
So for the same measurement, as we still hold the shares of the new T-Mobile shares, and this includes JPY 250 billion. So in both ways, for the second -- last quarter -- last first quarter and this year first quarter, if we take a onetime gain from the Sprint-T-Mobile merger, we should take JPY 1.1 trillion out of JPY 1.2 trillion for last -- same quarter last year. So that will give -- and for this quarter, for this fiscal year, about JPY 500 billion is the result out of the reduction of Sprint-T-Mobile related. So just to -- just for your information, for both quarters, we are recording a onetime gain from the Sprint-T-Mobile merger.
Of course, the Vision Fund is most important. And if you look at the cumulative gain and loss on investments of Vision Fund, so last year, about the same time -- actually, that we had quite a difficult time. I will say we were issued in the Uber -- although that they went public, however, the share price was not that bright, so there are many challenges. At the same time, we had faced the COVID-19 pandemic. So there are many factors there.
So just about a year ago that we had the most -- toughest time that we have suffered. But if you look at the cumulative way, this is that kind of a trend in the past 4 years for the gain and loss on investment. And I was -- here, up JPY 6.7 trillion gain has been recorded. So if you ask whether that Vision Fund is successful or not, I will say, "Yes, I think it is going smoothly and doing pretty well. So there are some ups and downs, of course. However, if you look at the cumulative way, I believe that this is making smooth progress in Vision Fund."
Including Vision Fund, Alibaba, SoftBank KK, SoftBank Corp., the mobile telecom, everything all in when it comes to the net asset value. We -- Software Group, we as an -- vision capitalist, we are not operating company anymore, so that the quarterly net gain, net income, it's not that meaningful, which is something that I am saying quite often these days.
Last year, although that we have recorded net income of about JPY 5 trillion. Even such a high number, I said this number itself does not have much meaning. I believe that was the -- just about 3 months ago, the year-end earnings announcement. So net income itself is not really -- does not have any important meaning. However, even more important thing is the net asset value. Value, which we hold as a vision capitalist and that net asset is most important, less interest-bearing debt. So that's the most important indicator for us to measure our success and performance. And that also gives us the enterprise value of our company. So the net asset value is the indicator that we should be using to measure our company and that -- it was about JPY 26 trillion.
Just about a year ago, when you see the peak, our highest bar, that was because of Alibaba and finance was about to go public. So it was immediately before they were to go public. And Alibaba share was jumping in -- dramatically. So that was kind of a big peak you see in the highest bar. Other than that, I believe that we are making quite a smooth increase.
Roughly speaking, that we all keep increasing, although there are some bumps here and there, but still doing pretty well. So net asset value, I said it's most important measurement, but what -- how about the breakdown? So here is the breakdown for net asset about 4 years ago. This is the quarterly bar. So 1 bar interpret the 1 quarter. So blue portion is the one that we start seeing the increase in blue bar, this is the Vision Fund-related. Orange in the middle is Alibaba-related. When Alibaba is high, then our -- it's taking about 60% of total net asset value. So that's why that the people are saying that we are too much independent in -- on Alibaba.
But you can also see other net asset value, too. So when you see this, Alibaba and others, combine those 2, and if you see the big picture, in the past 3, 4 years, actually, that it is relatively mild. However, we have -- in addition, on top of that, we have a Vision Fund, which is blue portion so that we start seeing a continuous increase in the value of Vision Fund portfolio so that we are creating quite a good value here. So Vision Fund portion has been making a good increase.
Without -- if without the Vision Fund, I would say our performance was relatively flat, if you look at the net asset value point of view. So even we say net asset value, people may still criticize because SoftBank Group, you are only evaluating your assets by yourselves. There are so many things included and the value measurement may not be really fair measurement, that kind of criticism I often hear.
But here, I want you to see this slide. This is the listed companies. Out of our total asset we hold, this is the breakdown between listed companies and unlisted companies. Pink portion, the bottom bars are the unlisted companies. About 7, 8 years ago, actually, we didn't have much of the blue portion, majority was unlisted company. So if this is the unlisted companies, I can understand that you may criticize this value. People may doubt about the value -- valuation of such unlisted companies. Of course, we're having a third-party analysis, third-party audit. But still, this is unlisted. This is just one way of interpretation of the value. But when it comes to blue portion, these are all listed companies and every day, market value is shared and valued by investors around the world.
So this is not our only valuation. This is evaluated by the market. And now that close to 90%, 87% are listed companies amongst all of our assets. And every day, all the investors around the world is putting this price, which will become our evaluation. So if you look at our balance sheet of SoftBank Group or if you look at the P&L, people may say that it's really difficult to see the value of such numbers. However, actually, in equity market daily basis, investors are putting their own judgments in price, Toyota, Amazon or whatever the public companies are. So they are taking and pricing the shares. And us, SoftBank Group, about 90% of our assets are actually checked and priced by investors around the world. So that's the measure that we calculate, I built it into our net asset value.
So balance sheet, many people criticize that it's really difficult to understand. However, if you look at this, I think it gives you the clear understanding of our company. And here, when it comes to Vision Fund, Vision Fund original was -- is -- a majority of the investments are in public and listed companies, therefore, SoftBank Vision Fund are investing in unicorns, unlisted companies.
So after we invest in such companies, and spending 6 months, 12 months, 24 months, they start going public. If they go public, they have a fair price by the investors around the world. And some specs transaction are also included. But I would say JPY 9.8 trillion value are -- be placed as an -- a public company instead of unlisted companies because of their IPO. And each of those numbers are the public price or the -- as a public company and about JPY 2 trillion equivalent has been already sold. So it's not the JPY 9.8 trillion. But I would say, if we include those, there are about JPY 12 trillion, which we have invested in unlisted company, and they went public and they realized.
And about JPY 2 trillion has been already monetized as cash, and those cash distributed to our LPs and our sales and we -- recycles and invest once again. So even we invest in Vision Fund, many people said, "That's only the paper numbers, numbers on the paper, so that this is only unrealized gain." You never realized, however, actually that we are steadily, step-by-step, we're monetizing those and are using those source recycling to the next investment activities. So we are creating such ecosystem. So actually, that we have seen about JPY 12 trillion equivalent of the value and out of which JPY 2 trillion has been monetized. So we do have realized gain as well.
And Vision Fund 2 -- at the time of launch of Vision Fund 2 -- after we finished our investment activities by Vision Fund 1, although we hold such portfolio, but we have already finished our investment activities in Vision Fund 1. And when we start Vision Fund 2, as you saw in the previous slides, we had the toughest time, which was about 18 months ago. That time, many people said and wonders that the Vision Fund is not doing well. So that in the beginning of Vision Fund 2, we were making good marketing. However, people did not want to join so that we have only used our own money to keep investing for this Vision Fund 2.
Now that I will say, it was a difficult time when we start. However, as a result, we were still making a good cycle. And this was actually a good result so far. And fiscal year 2021, our first quarter, only with our own money, so 100% with our own money, we have invested about JPY 1.6 trillion. And about half of them was -- originally came from distribution from Vision Fund 1 and Vision Fund 2 via monetization not disposal of the portfolio. So first, that we distribute to LPs and the remainings we've been using for the next investment activities.
So in the 3 months period, we have invested such money and about half of them are from Vision Fund 1 and 2 distribution. And also, we have a return from SB Northstar, which was operating by investing in listed securities like Amazon, Google, which we used our excess cash to manage our money. In the beginning, SB Northstar had a difficult time, but now, that they -- it's also making good results and return. So about JPY 200 billion, I believe that we are recording a profit for details. I think that I want you to check later. But this public securities managed -- or the operation has also contributing to our capital. So this is the kind of onetime, using only excess cash, managing our such excess cash and invest in public securities, our main investment, our core investment is the Vision Fund. That's the kind of a priority for us to spend money for investments.
So blue portion is from, as I mentioned earlier, distribution from Vision Fund 1 and 2 and also return from SB Northstar. So after we monetize, after we dispose our portfolio and that source is becoming our next investment opportunity. So that kind of a recycling ecosystem starts working. In the -- some leftovers -- so remaining set we've been also financing from outside and so on. So JPY 31.6 trillion is equity value of holdings and JPY 5.1 trillion is our net debt. So JPY 31.6 trillion less JPY 5.1 trillion give you net -- is net asset value. So this number, again, it's the net asset value.
And this red bar, our debt. Well, I always repeating this, but still many people say SoftBank Group had so much debt, debt-heavy company, debt bank not a SoftBank, that some people say, but actually, our equity value of holdings -- looking at the equity value of holdings, our loan-to-value is 16%. So if we sell our -- 16% of our shares or holdings, we'll be able to repay those debts. That's something executable if we wish to do so.
Of course, last year, you remember that the JPY 4.5 trillion monetization program has executed. And actually, we raised more than JPY 4.5 trillion, and we monetized -- has successfully conducted in about 6 months or so. And at the time of monetize, the value of our shares were not actually declining but still be able to execute such programs. So we could do so if we wish to do so. And we would call it as a disciplined, balanced investment activities. And balanced -- I mean, this red portion should be less than 25% compared to this blue portion. So we would like to manage our long value less than 25% in normal time, of course, even in difficult -- abnormal or not a normal time frame, but still, we would like to manage less than 35%. So more than 30%, we should not be carrying a debt against our equity value of holdings. So that's the -- kind of our internal disciplines.
And looking back, there were times when LTV exceeded 30%. But for the last 2, almost 3 years, it has been under 20%. So it's been going pretty well. So we try not to exceed 25% at a normal time. And once it exceeds 25%, we will slow down investment to drive more safely. That's how we strike balance.
Talking about Vision Fund, I mentioned earlier that we have invested in AI companies around the world, and 10% of the capital they raised was provided by us. And on a weighted average, we have 20% of holdings or ownership of 50% of AI companies around the world. And Vision Fund 1 invested in 92 companies with a third-party investors' money included. And Vision Fund 2 and LatAm Fund, they started with our own money, 100%, and they invest in those companies. So Vision Fund 2 has just started. But as far as the number of companies they invest, Vision Fund 2, invest more companies than Vision Fund 1; 1/3, Vision Fund 1; 2/3, Vision Fund 2 in terms of number of companies are invested and also LatAm. So we are getting more diversified portfolio. Looking at that, we are not depending on a particular company. So we are distributing or diversifying our risks. But AI revolution, we want to invest only in AI companies. So if AI fails, SoftBank could fail, that's the risk. But if the Internet failed, GAFA would fail. But in the last 20 years or so, we believe that Internet grew, which did.
And also our belief now is AI companies will grow, that's why we are willing to take risks. But as far as the number of companies are concerned, we have diversified investment, investing in many companies. Regionally, 34% in the U.S. followed by China before. In terms of fair value of holding that Vision Fund has, I mentioned earlier that JPY 10 trillion listed. And also for unlisted companies, we measured fair value 1/3 of the company's invested in the U.S. In the past, 1/3 in China, but it's getting smaller and now 23% China. But recently, since the beginning of FY 2021, ratio of China has been down to around 11%. When it comes to new investment, only 11% of the company's SoftBank Vision Fund invested are in China, 90% other than China. Cumulatively, Fund 1, 2 and LatAm, we invest in China, 23%. And Asia, excluding China, include South Korea, like Coupang and Grab and Tokopedia. But now invest Asia excluding China more than invest in China. And also Europe and Latin America are growing. So as you can see, we don't depend on a particular region, so we are well balanced in terms of regions that we invest in.
And next, when it comes to AI, what about sectors? In the past, ridesharing like Uber, DiDi, Grab, so rideshare accounts for most of the investment, but now consumers, transportation, including ridesharing and logistics, frontier technology, proptech, fintech, et cetera. So again, in sectors, we have diversified with a good balance. So again, about 300 companies have invested in and well diversified in terms of sectors.
In the past, Internet-related companies -- what -- how -- revolutionize GDP, like Google, Facebook, Snapchat and TikTok, those Internet-related companies. So what revolutionized? The first, media. Internet revolutionized media. And also, the Internet revolutionized retail. When it comes to advertisement or marketing, it accounts for 1% of the global GDP. And retail accounts for 10% of the global GDP. So of the global retail's e-commerce -- how e-commerce has been popularized. So 10% of retail has been migrated to e-commerce globally. Maybe a bigger percentage in U.S. and China, but globally, 10% of retail is e-commerce. So 10% x 10% equals 1%. That means of the global GDP, 1% advertisement and 1% e-commerce, those are the industries revolutionized or converted from traditional to new style that's driven by the Internet.
But when it comes to AI, remaining 98% of the industries of GDP, if I may, will be replaced or revolutionized. For example, medicine, logistics, transportation, consumer services, lot of services and industries, all of them will be revolutionized by AI. So 98% of the GDP -- or industries accounting for 98% of the global GDP will be revolutionized by AI. So again, AI is going to revolutionize every industry including entertainment, fintech, et cetera, et cetera. That's what I believe, sincerely, from the bottom of my heart.
Like I said earlier, we invested in 300 companies. And let me highlight and share with you 4 companies. The first, Yanolja based in South Korea. And it is a super app in the travel industry. You can book hotels, and you can travel, and you can experience a lot of things, and you can go to restaurants with AI. The company's revolutionized those offerings. And let me show you a video.
[Presentation]
So that was Yanolja. Let me add some comments. So they are using AI to provide inventory information, events information, seasonality. Also, they do dynamic pricing and also they offer personalized travel plans. So both hotels and travelers enjoy benefits, especially in the last 12 months. Due to the corona COVID-19 pandemic, travel industry suffered most. But number of rooms sold, it grew 2x in the last 3 years. And the GMV per paying user grew by 1.4x in 3 years. But in the recent 12 months, it's like this. Even after the COVID-19 hit the world, the registered number of users grew. But how about GMV? Well, GMV grew also constantly despite the COVID-19 pandemic.
So globally, the travel industry has been suffering during this pandemic. But despite that, without any excuse, this company, Yanolja has been just growing, leveraging AI, providing user benefits and also benefits to hotels and restaurants. And Yanolja was about to go public in South Korean exchange market, but we decided to invest in the company so that we could help them to go global. Maybe they might want to think about investing in the U.S., not just in South Korea.
Next company I'd like to share with you is Klarna, which is a great company. The number of users, 90 million; retailers, 250,000 brands; and 80,000 physical stores. And per day, transaction or purchases, 2 million. So again, Klarna has been growing fastly. This is a fintech company. And again, let me share with you a video.
[Presentation]
Klarna analyze the credit risk using AI, especially for the young generations who don't have a credit card, I think there are many. And actually, Klarna providing, issuing a onetime credit card immediately so that they will be able to use credit cards and pay installment. Of course, you can pay immediately or you can install or you can "try before you buy" your financing.
So this is a fintech with a credit card type of feature in providing such service that once you use it, a repeating rate is very high, actually. Without AI -- because this -- they are providing credit. Without the AI, you cannot provide credit at the immediate time when they apply for because issuing such credit card, onetime credit card, you may not be able to get the return or get the payments but a credit score has been analyzed thoroughly by AI in real time. And looking at the past activities and data. And also, when you use a second time, third time, so that the repeating customers are actually increasing. So if you come to the second time, third time, credit score will be accumulated so that frequency of the use or the consumer cohorts actually are increasing consistently.
So for the new user, the first user is using about 9x a year. A year before, 11x or 10x. So for those that -- who's using Klarna for a long time is actually using more in Klarna and doing shopping. So actually -- up to 27x per year using Klarna for the shoppings or so. Once you start using it, you get used to it. And the more you use, the more credit points or credit score you accumulate so that you'll be able to reduce the bad debt. As a result, that you'll be able to see more -- better profitability.
And from the retail points of view, if you are the member of Klarna and if you are shopping -- or with Klarna -- actually, the average order value is increasing 40%. So many retailers, whenever they provide the online shopping, they would like to partner with Klarna because if you partner with Klarna, the payments -- if you allow customers to pay in Klarna, you have about 1.4x of the purchase price [ per ] purchase. So the shop is happy, too. User side also happy because they can use the credit card, onetime credit card immediately, so that there are a big advantage for user as well. So it's making a rapid growth.
And actually, the GMV is coming close to JPY 6 trillion. Actually, we wanted to invest this company for years. And actually, our managing partner is negotiating for the past few years to invest in such a company, but they don't need money. They are saying they don't need money anymore and so on, so that they haven't received our money. However, finally, recently, that we are able to have an agreement with the founder of Klarna to receive our investment. We are so excited to see their growth.
One other company that I would like to share with you is AutoStore. I would like to show you the video.
[Presentation]
So, so far, robot system in the warehouse, for example, Kiva by Amazon, that's only that robots can go around in a 2 dimension. However, not only go back and forth, but actually, they can go ups and downs, so 3-dimensional in AutoStore robots. Therefore, that you'll be able to make more efficiency in space use utilization. So not only the horizontal but also vertical that you'll be able to fully use such space. So the space utilization will increase dramatically. So around the world, warehouse space is in short because e-commerce is growing. But real estate efficiency can increase by this. And actually, labor cost is increasing, too, but this is robot so that we'll be able to reduce labor cost as well. And actually, it's cheaper than labor cost as well. So layout has a lot of flexibility there. And this grid warehousing system that you just added next to each other like Lego and without stopping the activity, but still, you'll be able to increase the spaces, which is very efficient.
And also, this is analyzed and also controlled by AI. So if you have products with a high frequency of shipments, that comes to the top, which is closer to the robot. So that based on such analysis by AI, the locations of such products has been optimized.
So while that we see the increase in labor cost, but this provides you cheaper, faster, more accurate, also around the clock and providing you the service. It's making a good growth, and we are -- have invested in this company about 40% already. So near future, I believe -- they are already making good profits, so sometime in future, this can also be a great success. They have already provided 500 customers, and these companies are already using AutoStore. So a variety of the sectors, apparel to electronics to food. And so many companies, about 500 of those are introducing AutoStore. So this such new system, logically, it goes well, but does this really work? That's the kind of a question you may have.
Can we really reduce our cost? That's another question you may have. If it's under the development, you may doubt about the reality. However, AutoStore already show you the achievements. In about 38 countries, 700 locations, installation has been already made. So this robot grid warehouse has already been used. And this is doubling the sales and profit and making a rapid growth. So a very exciting company here.
I mentioned earlier that those company invest in by Vision Fund, and about 90% of them are not making a profit. But this case, AutoStore, actually, this is exception. They have already recording a good profit.
Next example is food delivery from India. In the United States, we invested DoorDash and made quite a good return from the investment. They are also making a good growth. Uber Eats, DoorDash, both of them are actually our portfolio of the Vision Fund. They are competing each other. But when you look at India, this is something similar to DoorDash or Uber and company called Swiggy. Swiggy and Zomato, those are the 2 competitors. And they are taking about 50, 50 market share, and they are competing, and we invest one company, which is Swiggy.
This is the large -- one of the largest scale delivery platform in India. And again, I would like to share with you the video.
[Presentation]
So active users, over 20 million; partner restaurants, 120,000; and orders per day, 1.5 million; number of drivers, 200,000. So they are again making a rapid increase or growth.
Recently, not only the food delivery, but they are also delivering the other goods, too. So they are also using AI so that trying to achieve the efficiency of the recommendations or delivery drivers or the good information about buy. So that based on the purchase record of the users, they are also providing the marketing promotions. So they are taking advantage of AI, time, day of the week, time and providing a good recommendations to the users.
Number of orders per day has increased by 2.5x in 1 year. Revenue has increased by 2.8x in 1 year. So competitors of this -- these 2 companies actually taking 50%, 50% of market share. And one recently went public in India, share price doing great. So I think it was JPY 13 billion or something market cap has recorded. And we invest in this company, Swiggy, and JPY 400 billion to JPY 500 billion investment value and investing in such. So this, again, if they go public, I believe that we will be able to see the good return from here, too. So that's our expectation.
So Vision Fund has been performing well. After the end of June, we started seeing issues in China, right after DiDi went public and Food Truck Alliance right -- went into public. And right after that, Chinese stock market for high-tech companies like Alibaba and Tencent, Baidu, Meituan, those high-tech companies in China are struggling now. But in the long run, at some point, because those companies are growing well performance-wise, so the stock price should be recovered, I believe, in the future, at some time. There are good times and bad times. And whether it's a good time or bad time, my belief remains the same.
AI revolution in the next 20 years and even more keep revolutionizing things. That's my belief. And me, myself included, the management should take risks when conducting investment. At the time of its SoftBank Vision Fund 1, the management, including myself, contributed 17%. Like SoftBank Group contributed investment in SVF1, so the management was willing to take risks. And we've got approval of the Board that co-investment was fair in SVF1 and ratio was 17%, contributed by the management and with the Board approval. But right after execution, SoftBank Vision Fund 1 faced challenge and SoftBank stock price tanked, and I became poor. And other people in the management who were willing to risk couldn't afford taking risks. So they pulled back. So right before, execution, the co-investment program was postponed.
As you can see, SoftBank stock price was at the bottom. And the value of the stocks that I provided as collateral went down. So again, this co-investment scheme was not executed for SoftBank Vision Fund 1. But SoftBank Vision Fund 2 has been going well. And in the meantime, there are still risks out there like risks in China. But again, we want to take risks, including myself. So at the latest Board meeting, without my presence, our Board members, excluding myself, discussed about this co-investment scheme that we wanted to execute, but we didn't for Vision Fund 1. So we've got the Board approval to execute this Vision Fund 2 co-investment program. So percentage-wise, same, 17%.
So last time, all management pulled back, but myself -- I was willing to execute, but a program didn't work because other management team pulled back. But this time, it's different. Why? Because -- so 17%. I take risks all by myself initially, and then I distribute to other people in the management. So I would like them to take some risks, but I am going to take risk 100%. That's my personal commitment. So it's just a start.
Usually, when it comes to venture capital investment fund, 20%, 30% performance fee goes to the management. But when it comes to SoftBank, the management, including myself, doesn't have any investment incentive. Rather, we take risks and co-invest to expect return but also taking risks. So again, as management, including myself, want to take risks and expect return. Eventually, my successor and successing management, I would like them to take risks continuously while expecting return. So maybe we're going to refine this scheme going forward. But I want to make sure that this kind of scheme stays as culture of SoftBank investment.
That's all for my presentation. But before I end, just to remind you, as a summary, AI revolution shapes the future with a shared vision. We, together with 300 companies that we invest as a vision capitalist, we share vision and shape the future. That's what I think is AI revolution. And 10% of AI companies in the world, we provide capital to them. That's the current status.
As the size of the market grows, maybe they're not going to be 10% anymore. But now as a vision capitalist, we invest in 10% of the global AI companies, and I think we are in full swing. We make sure that we are confident in taking risks and expect return. AI revolution has just begun, and we are committed to doing this because we want to make everyone happy with Information Revolution.
And thank you very much for your continued support. Thank you.
Thank you very much. Now we'd like to take questions. First, we'd like to take questions from the floor. [Operator Instructions] We'd like to take up to 2 questions per person so that we can take questions from as many people as possible. First, people in the floor. The first...
My name is [ Ichikawa ] from [ Yomiuri ] Newspaper. About SBG's portfolio, I have questions about Vision Fund and Northstar. You said that Northstar is going to get smaller, and I noticed that in the financial report, but maybe Northstar can be a convenient vehicle depending on the market performance. So how are you going to position Northstar going forward?
Thank you for your question. Northstar, for the time being, we will get them smaller. Why? Because the capital need for SoftBank Vision is getting bigger and bigger. So we should prioritize SoftBank Vision Fund. So for foreseeable future, we are planning to make Northstar start smaller.
Next question about SoftBank Vision Fund. You talked about sectors and regions, and it was really clear for me where you invest in. And you mentioned that you are well balanced. And also China, China country risk. The percentage of China is smaller now. But by country, by sector, going forward, do you have any policy or plan going forward how are you going to diversify?
Thank you. In China, there are 2 centers where AI and technology are evolving, U.S. and China. So AI technology and business models, revolution of those things will continue in China, I believe. That said, when it comes to our investment activities, due to new regulations and rules, so what kind of regulations will be implemented? In what areas? And what kind of impacts those regulations could have on the stock market? We want to wait and see for some time. We are not against or for Chinese government, and we don't have any doubt about future potential of China. But again, new rules and new regulations are beginning to be implemented. So until things get settled, we want to wait and see.
In 1 year or 2 years under the new rules and under the new orders, I think things will be much clearer. So once things get clear, then we are open to resume active investment in China, but again, for some time, we want to wait and see how things go.
So my name is Otsubo from Sankei newspaper. So 2 Chinese -- or China related. So 11%, you said, this is the latest figure. But exactly when? And also 23% that in pie chart. So when? So can I ask you these 2.
So 23% is in the past 4 years, combining fund 1 and 2 total ratio. 11% is fiscal '21, after April to June. But Vision Fund 2, we are continuously investing by Vision Fund 2. And after April, by country wise, that we made a new investment for this quarter, 11% is the ratios for investment in China.
My next question is Alibaba. So out of the net asset value, Alibaba is taking quite a large portion still. Due to Chinese government measurement, I am assuming that Alibaba is going to get impacted. But you mentioned that the new investment, you would like to wait and see. But Alibaba, how do you look at Alibaba going forward?
Yes. For Alibaba, under the antitrust law, in China, they have already paid the penalty type of fee. And they are complying with new rules that the Chinese government is sharing, and I believe that they will continuously run their business steadily. And the sales is actually increasing and growing like 1.3x or so. So they are growing almost 1.3x every year. And latest, I believe, is not slowing down and actually keeping the momentum. So I don't -- of course, when you look at the share price of Alibaba, once the situation calm down, I am expecting and believing that Alibaba share price will come back. But I show you the graph of net asset value. Can you share that once again that I used for the net asset value? So if you look at this graph, Alibaba is taking 39%, Vision Fund related 34%.
But actually, as of today, Vision Fund related, blue portion, and Alibaba, the orange portion, is about the same or we are -- I would say, Vision Fund related is becoming larger than Alibaba. So actually, the Vision Fund related is growing. So absolute amount wise, because of the China issue, Alibaba is declining. And the DiDi, Food Truck Alliance, those 2 Chinese related portfolio are reducing in value. But the proportion wise, I think that we are decreasing in concentration in Alibaba. But like I mentioned earlier, Alibaba is showing quite a good pace of revenue -- sales and revenue. So I myself personally believe that the share price of Alibaba will recover.
Nakagawa from Toyo Keizai. 2 questions. First, last quarter, Vision Fund alone had over JPY 3 trillion of gain, and Vision Fund 1 & 2 this time, about JPY 300 billion. Other than China, our stock price went down recently. So how do you see?
In Coupang went down it's true, but cumulatively, they are still making money. So Coupang is a great company. And our investment in Coupang, I think, is a great success. Of course, talking about the stock price, it went down from the listing price, and DiDi was included in the numbers as of end of March when it comes to China. But again, we are facing tough challenges when it comes to investment in China. That's true.
Next question is about SoftBank Vision Fund 2. You increased the commitment, I believe, and the piece of the investment is faster and faster. So I wonder why you are getting more and more aggressive. And third-party investors, I don't know if you have a plan to invite third-party investors for Vision Fund 2.
Well, when it comes to offense or aggressiveness, AI revolution has just started. And the next 20 years or so, AI revolution will continue to grow. And again, it's just the beginning. So I think we are going to keep aggressive. And when it comes to capital from third-party investors, well, recently, we are hearing some interest from a third-party investor, but we've got a great ecosystem running. So for the time being, we want to continue this way, and we want to wait and see.
We are not saying that we are not going to invite third-party investors at all forever. But again, for now, our own money is enough to get the cycle going. So that's current idea.
My name is Deborah from Wall Street Journal. So I would like to ask you about the buyback -- share buyback. Investors are expecting high expectations on the buyback, but how should we think of it?
So far, whenever we have a big monetization deposit, we have announced our share buyback. But this time, we don't have such liquidity event. So we are not announcing any share buyback. But at the same time, our net asset value -- considering the net asset value, we have seen almost close to 50% of discount in equity market. So against the -- our assets we hold, we have been discounted by 50% -- close to 50%. So sometime, there -- when there is any opportunity, we should be thinking about the buyback. But how big size and when, that's something, that we are studying every day. Hope I answered your question.
I have another question. I want to ask you about the China risk. 23% you mentioned earlier, combining Vision Fund 1 and Vision Fund 2 have invested in China related portfolio. And I believe that we have quite a high expectation on such Chinese companies like DiDi, ByteDance, Food Truck Alliance. So there are many names. But how you think about those companies? So do you still keep such expectation you had when you invested? Or because of these regulations, do you think that you need to review such expectation?
I still have good expectation on those companies. And actually, our total investment in China by Vision Fund 1 and 2, we are actually -- the value is over, our investment costs. But when it comes to the new investment going forward, like I mentioned in my presentation, since this year, after April, our investment ratio to China is about 11%. It's because we would like to wait and see a while.
While I would say, is it 6 months, 12 months, I don't know yet. And what kind of regulation? How deep, how far and how big? And in which sector, that we don't know yet. And which sector will be even smaller risk, we don't know at this moment. So that's something that we would like to be careful about and be cautious. Once we have a bit better view, then that we would like to resume the investments.
And last from the floor because we've got some questions from Zoom. So the last question from the floor. I might come back to the floor later.
Kudo from Nikkei. First question about China -- or control by the Chinese government on tech companies. You little bit talked about that before. And value of holdings, I believe that 50% of the value of your holdings are in China. So I wonder, what kind of impact you see on NAV and how long? And also potential companies like ByteDance, you have invested in those unlisted companies. But I wonder if you have any plan for those exit or any initiatives.
Well, like I said earlier, as a total, we are still receiving gain on investment in China. But again, we want to wait and see because there are things that we don't know in China. And when or how we resume investment more actively in China, again, there are sort of a lot of uncertainties now. So we will be cautious for the time being.
And next question is about Fund 2 or third-party investor for Fund 2. I'm sure a lot of demand for capital and AI industries going for. But if or when you need third-party investors, are -- when do you think is it? And before, trust issue was there around Vision Fund because of the WeWork, et cetera. So what's your view?
So third-party investment for Vision Fund 2, the timing and the size, we don't have any discussion internally. At end of SoftBank Vision Fund 1, our -- well, trust in Vision Fund 1 tanked at the bottom. But performance wise, Vision Fund 1, 2, cumulatively, we are seeing gain about JPY 6.7 trillion. So from that perspective, trust to us, I think, is recovered to some extent. That said, it's not something that we judge -- other players will judge you. So all we have to do is just to try hard to make sure that we keep getting return.
Looking back 20 years, the Internet industry suffered net bubble burst and Lehman shocks. So they went through ups and downs. But in the last 26 years, it grew by 2,000x, that was Internet industry. And again, AI revolution just started, and there should be ups and downs going forward. But in the long run, I believe that AI's value continue to grow. That's my strong belief, and all I need to do is just to keep going and moving toward my belief.
So next question is from Zoom.
So we would like to take the first question from Zoom [Operator Instructions]. So first, we would like to take a question from [ Huga ] from Bloomberg.
Yes. This is [ Huga ] from Bloomberg. Can you hear me okay?
Yes. Yes. Please go ahead.
Thank you for the presentation. I would like to ask you about the co-investment program. So this is for the Vision Fund 2 and Latin American Fund, I believe. And I believe that you try to enhance the commitment by the management and also taking the risk. That's how you explain. But the individual guarantee is going to be made so that Masayoshi Son is providing your shares of SoftBank Group to Vision Fund. Can you elaborate this portion? Because you mentioned earlier the risk. Is that -- I believe that, that doesn't go to a shareholder of SoftBank Group because, recently, the share price of SoftBank Group is not doing too well. So that's why that I would like to ask if this risk comes to the shareholder of SoftBank Group.
Yes. Thank you for your question. I said my personal -- me as -- about 17% core investment to be made for this time. Amount wise, JPY 200-some billion, I believe. My personal SoftBank Group asset value is about JPY 3.5 trillion or JPY 6 trillion. That changes every day, but about JPY 3 trillion -- some -- JPY 3-point-some trillion asset value of SoftBank Group, of which JPY 200 some billion risk will be taken by me. I think that's something doable.
And me personally, I would like to go together with the Vision Fund in good times and bad times. I mentioned earlier that we are not inviting the third-party money in the meantime. Of course, in the future, we may consider. But at this moment, as a management, I myself as a core investor, we would like to take a good risk and run this business.
So relates to my first question. In the previous earnings and hearing the management speech, these days, I'm hearing that you are preparing to invite third-party money to Vision Fund 2. But hearing you today, you are still willing to do by your own money in the meantime. So is this a co-investment program? Has any reason for such comment? Because you cannot invite enough people outside. And is that the reason why that you need to run this co-investment program? So do you have any relations between co-investment program and third-party money?
I think you misunderstood because I said -- I have never said that we would like to invite the third-party money for about the past 12 months or so. So never since -- and because it was -- it has been unpopular. So that's why that we started Vision Fund 2 by our own money. And since we start with our own money, we've been able to receive a good distribution from Vision Fund 1, and such money recycling program or money recycling is doing pretty well. That's -- therefore, we don't need to invite third-party money in the meantime. So we don't have any plan or discussion internally to invite the third-party money at this moment. But on the other hand, management, not taking risk, not taking return other than -- compared to that, that I believe it is even more healthier for management to take good return and good risk, and that will make a better result for the company and for the stakeholders.
So in general, venture capital funds, management never take risk, even in one penny, not taking a risk, but taking about 20% to 30% of the return. So such program is actually traditional, but I don't agree with the program too much. Without the risk, I don't believe that the return should be given. And that's better for the stakeholder -- shareholders. So that is why this time, we would like to take 17% equivalent of the risk and make a good risk and return here.
Next from the Zoom, Mr. Wada from Nikkei.
My name is Wada from Nikkei. About Vision Fund 2 invest in 161, and I'm sure that piece of investment gets faster. Maybe 1, 2 companies per day. It seems like you make investment decision, 1, 2 companies per day. So the reason why the pace of investment is faster. And risk management policy, I'd like to ask you questions around the piece of investment.
Yes. AI companies, there are more and more AI unicorn companies, players or more in numbers. So in order for us to actively invest in those AI unicorns, we need a strong investment team, and they have built expertise, in fact. So because of those reasons, we are increasing the pace of investment.
SoftBank Vision Fund 1, the size of investment per case was big. So that was in the case of SoftBank Vision Fund 1. But for SoftBank Vision Fund 2, maybe early stage and smaller AI companies, we would have -- we prefer to invest more. So the investment per deal is smaller than the case in SoftBank Vision Fund 1. But instead, we are diversifying risks. So the current pace is something that we want to keep for the time being.
And one last question from the floor. So that gentlemen, please.
And due to the interest of time, this will be the last question. My name is [ Kota ] from Mainichi newspaper. So a bit different from the earnings. The day before yesterday, we have a closure of Olympics Game and the visual treat, that why we are holding this Olympics Game under such circumstance and this has ended, how do you feel about the Olympics?
Well, for athletes, they have no any -- nothing that they have to feel responsible. They have given us a great performance. They have shown us a great performance. We respect them, and I really -- I believe that it's a great effort that they have made. But now that we're seeing explosive increase in cases, I feel really the pain and very worried about the situation. I hope that answers your question.
Thank you. With the interest of time -- sorry that I didn't have a good management of the time, only because I am so passionate. So that is why that I had run over the scheduled time. And thank you very much for your support. We will do our best. Thank you. That is all for today's presentation.
Thank you. Thank you very much once again. This concludes the SoftBank Group Corp. earnings results announcement for 3 months period ended June 30, 2021.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]