SoftBank, a conglomerate has seen returns, on its investments in India surpassing $5.5 billion since it entered the Mumbai market in 2018. Sumer Juneja, the Managing Partner shared that they have gained $1.5 billion in the year through late-stage exits with $1.5 billion invested in tradable equities. SoftBanks strategy focuses on achieving exits. They have benefited from successful startups like Lenskart and FirstCry. They have added $400 million to their gains for Q1 FY24 through investments, in startups.
SoftBank, a prominent Japanese conglomerate, has successfully realized more than $5.5 billion in exits from its India portfolio since initiating operations in November 2018 in Mumbai, as revealed by Sumer Juneja, the firm’s Managing Partner and Head for Europe, the Middle East, and Africa.
In a recent interview with various media platforms, Juneja highlighted that the late-stage investor has achieved $1.5 billion through exits within the last 12 to 18 months. Additionally, he pointed out that an additional $1.5 billion is currently in liquid assets, held in tradable equities.
Juneja outlined SoftBank’s anticipated annual exit range of one to two instances in India. Notably, the major Japanese investment player has recently undertaken partial exits from unicorn companies like Lenskart and FirstCry. It has also garnered profits from publicly listed startups such as Paytm, Zomato, Delhivery, and Policybazaar. Remarkably, these four startups collectively contributed gains of $400 million to SoftBank Vision Fund 1 during Q1 FY24.
Nevertheless, SoftBank‘s most substantial exit thus far remains its 2018 divestment from Flipkart, where it sold its 20% stake in the e-commerce giant to Walmart for approximately $4 billion. In a subsequent development, SoftBank re-engaged with Flipkart in 2021 as part of a $3.6 billion funding round.
On a broader scale, SoftBank, the Japanese investment powerhouse, has deployed approximately $15 billion in investments across India since 2011. A significant portion of these funds, approximately $11 billion, has been funneled through its vision funds since 2017.
Juneja articulated SoftBank’s investment strategy, focusing on backing companies valued at $1 billion to $2 billion and eventually exiting when valuations reach the $5 billion to $6 billion range.
Anticipating more forthcoming exits, SoftBank is poised to witness its portfolio companies such as FirstCry, Lenskart, OfBusiness, Swiggy, Icertis, and Ola Electric embark on initial public offerings (IPOs). However, Juneja acknowledged the intricacy of predicting these IPO timings due to market volatility and the upcoming 2024 general elections.
SoftBank’s Evolving Approach
In May 2022, following the market turbulence triggered by Russia’s Ukraine invasion, the Japanese investment giant transitioned into a “defensive mode.” Remarkably, more than a year later, both Vision Fund I and II managed to turn the tide with a $1 billion investment gain, overcoming six consecutive quarters of losses.
Despite being a significant supporter of unicorn ventures with 22 Indian unicorns within its portfolio, SoftBank’s pace of investment in India has decelerated over time. In 2021, the venture capitalist injected over $3 billion across 17 deals. In sharp contrast, its engagement was limited to just four rounds in 2022.
By July, SoftBank’s founder, Masayoshi Son, conveyed to investors the company’s shift to an offensive strategy, expressing enthusiasm for leading the AI revolution.
Juneja emphasized, “Masayoshi Son has been advocating for AI since 2017, yet the utilization of AI has evolved into a more sophisticated form. Unless a company possesses a highly skilled and tech-savvy product team capable of leveraging AI, we abstain from investing.” He further highlighted the meticulous evaluation process undertaken by the firm to ascertain if prospective companies possess the requisite tech and product teams, as well as the DNA to establish AI-centric enterprises.
