SoftBank's Son praises 'growth engine' Arm after Vision Fund losses

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TOKYO — SoftBank Group Chairman and CEO Masayoshi Son on Friday said he was “lucky” that regulators around the world shot down its sale of U.K. chip designer Arm to U.S. peer Nvidia, as it bets on a blockbuster listing to revive a slump in its stock price.

“Arm is the engine at the forefront of the information revolution,” he told shareholders at the company’s annual general meeting. “It is at the core within the core of SoftBank Group.”

Son spent a large chunk of his presentation talking about Arm, the world’s dominant provider of designs for semiconductors, explaining how it is increasingly taking market share in areas like cloud computing and cars. “Arm will drive the information revolution of all kinds, not just smartphones,” he said.

It was a large contrast to shareholder meetings of the past few years, when Son spent more time explaining the Vision Fund. The shift in tone is a sign of the dramatic change in global tech markets.

SoftBank swung to its biggest ever net loss, 1.7 trillion yen ($12.6 billion), for the fiscal year ended March from a record 5 trillion yen net profit the previous year, as the value of its tech portfolio shrunk dramatically.

The number of initial public offerings have declined by more than 50% globally so far this year, as inflation fears hit investment appetite for tech stocks. Several SoftBank-backed companies, including Chinese drone maker XAG and Israeli trading platform eToro, have either withdrawn or delayed their listing plans.

When he announced results last month, Son said he would slow down the pace of investment.

SoftBank’s biggest hope is Arm, which it bought for $31 billion in 2016. The company’s revenue for the year ended March increased 35% year-on-year thanks to shipments of 5G smartphones and telecommunications equipment. Son has stepped up efforts to clear the path for its IPO, saying in May that it is one of his key priorities. Arm’s joint venture in China recently resolved a key management issue that had been a bottleneck for two years.

SoftBank has already bet on a smooth IPO, taking out an $8 billion loan by pledging Arm shares as collateral.

Son said SoftBank is managing market risks by keeping net debt under 25% of net asset value and keeping cash equivalent to two years worth of bond maturities. “Since the market is uncertain right now,” he said, “our cash position is much more” than usual.