Vision Fund, the $93bn fund closed by telecommunications and internet firm SoftBank earlier this year, has continued to make a sizeable splash, providing a reported $2.5bn in funding for India-based e-commerce company Flipkart, one of three billion-dollar deals it backed that week.
The amount was “at least” $2.5bn, three separate sources told Indian financial news outlet LiveMint, and Vision Fund acquired new shares as well as some held by hedge fund manager Tiger Global Management. The cash will be added to the $1.4bn Flipkart raised from corporates Tencent, eBay, Microsoft and Naspers in April this year.
Assuming it was made at the same valuation as the April funding, the deal would have valued Flipkart, India’s largest e-commerce marketplace by market share, at just over $14bn post-money and would give SoftBank Vision Fund a stake in the company just shy of 18%.
SoftBank had previously tried to broker Flipkart’s acquisition of Snapdeal, another prominent Indian e-commerce platform in which SoftBank is a key backer, but once the deal fell apart at the end of July, Vision Fund moved quickly to invest in Flipkart directly. The transaction was one of three 10-figure deals in which it was involved last week.
The fund led a $1.1bn round for Switzerland-based pharmaceutical and healthcare technology developer Roivant Sciences on Wednesday, the same day that news broke revealing that it would join SoftBank to invest $1bn in US-based sport e-commerce platform Fanatics at a $4.5bn valuation.
In addition to investments, SoftBank last week moved a 4.9% share of graphics processing technology producer Nvidia, worth $5bn, to Vision Fund, adding it to a 25% stake in Arm Holdings, the semiconductor technology provider SoftBank acquired in July 2016, which it shifted to Vision Fund earlier this year.
Vision Fund reached its $93bn first close in May 2017 with contributions from Middle Eastern sovereign wealth funds and corporates Apple, Qualcomm, Sharp and Foxconn, and has since made a series of big investments.
Companies in which the fund has invested include indoor farming startup Plenty and robotics technology developer Brain Corp, and Bloomberg has reported that Vision Fund has acquired a sub-5% share of iRobot, the publicly-listed creator of the Roomba automated vacuum cleaner, though that deal has not been confirmed.
Given the amount and scale of the deals, last week essentially acted as Vision Fund’s coming out party, but it is important to note that, contrary to earlier reports that suggested SoftBank would be channelling its large technology investing into the fund, it is continuing to make large bets itself.
In the past four months SoftBank has made significant investments in ride hailing platforms Grab, Didi Chuxing and 99, e-commerce and financial services platform One97 Communications, working space provider WeWork China and online business lender Kabbage, among others, and CEO Masayoshi Son said last week the company is considering a large investment in Uber or Lyft, the two market leaders in the US on-demand ride sector.
Those deals are relatively in line with the online services-based investment strategy that has typified SoftBank’s corporate venturing thus far, but looking at Vision Fund’s portfolio companies gives an indication of where it may differ.
Flipkart and Fanatics are relatively straightforward e-commerce platforms while Plenty, Roivant and Brain Corp are all working on innovative technologies, in the agricultural, healthcare and artificial intelligence sectors respectively. While iRobot has been around for a while, the reported investment was made as it prepares to move into home data provision.
The investment pattern would suggest that Vision Fund plans to mix large, early-stage investments in cutting-edge technology developers with substantial stakes in e-commerce market leaders (or, assuming iRobot fits into the latter bracket, consumer technology producers).
SoftBank is expected to transfer some of its legacy investments to Vision Fund but in terms of new deals, it seems to favour combining longshot investments that could perhaps pay off considerably further down the line with steadier bets in the near term that will hopefully ensure the fund can reliably deliver returns as well as strategic benefits.