New Delhi, India’s red-hot market for initial public offerings (IPOs) is giving Japanese technology investor SoftBank Group Corp. a reason to celebrate. This week has been particularly successful for SoftBank, with three of its backed firms making strong debuts on the Mumbai Stock Exchange.
The e-scooter maker Ola Electric Mobility Ltd., the largest of these IPOs, has seen its shares surge by more than 60%. Meanwhile, software maker Unicommerce eSolutions Ltd.’s shares have jumped over 80%, and baby-products retailer Brainbees Solutions Ltd. has enjoyed a rise of about 40%.
These gains come at a crucial time for SoftBank, which has been dealing with disappointing earnings and a reality check on the potential of artificial intelligence (AI). The Tokyo-based investment firm, led by Chief Executive Masayoshi Son, is now looking to use these IPO successes to fuel a significant push into AI and semiconductor ventures.
The IPOs, which debuted just this past week, have not only boosted the companies involved but also provided SoftBank with an impressive $155 million by selling a portion of its shares in these firms.
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This figure is based on company disclosures and Bloomberg’s calculations. Although SoftBank is required to hold onto a substantial portion of its shares due to lock-up periods, the initial returns are promising and signal potential for more gains in the future.
SoftBank’s recent successes in India are particularly noteworthy given the firm’s recent struggles. In the June quarter, SoftBank’s Vision Fund segment reported a loss of ¥204.3 billion ($1.4 billion). This was largely due to write-downs on a portfolio filled with young, loss-making technology companies.
The positive returns from these IPOs come as a welcome relief after previous disappointments in India, notably with bets on payments company Paytm and logistics provider Delhivery Ltd.
Despite these setbacks, SoftBank remains committed to its investment strategy in India. The Vision Fund, which plays a crucial role in SoftBank’s global investment efforts, has been active in helping Son identify and prepare for future deals.
Alex Clavel, co-chief executive of SoftBank Investment Advisers, mentioned in an interview that more IPOs from SoftBank’s portfolio can be expected globally, mirroring the recent activity in India.
Clavel emphasized that while SoftBank may have sold a portion of its shares in these IPOs, the firm remains heavily invested in these companies, signaling confidence in their long-term potential.
The IPO market in India is currently buzzing with activity. Ola’s recent IPO raised approximately $733 million, making it the largest in the nation in about two years. Investors are also keenly watching the anticipated $3.5 billion listing of Hyundai Motor Co.’s local unit, which is expected to make a significant splash in the coming months.
SoftBank is also preparing for future IPOs from other companies in its portfolio, including the popular food-delivery app Swiggy Ltd., which has already filed a draft offer document with India’s market regulator. Additionally, SoftBank is backing Oyo Hotels’ parent company Oravel Stays Ltd., though the company’s plans for a Mumbai listing have faced delays.
These developments in India’s IPO market are particularly important for SoftBank as the company seeks to bounce back from its recent challenges. While the firm’s shares have recovered somewhat this week, they remain 30% below their July all-time high.
Investor enthusiasm for AI and chip-related ventures, which had previously driven up shares of Arm Holdings Plc and its parent company, is beginning to show signs of waning. However, the strong start for these Indian IPOs offers a glimmer of hope and underscores SoftBank’s strategic focus on emerging markets like India.
SoftBank’s ability to pick winners in India’s competitive and rapidly growing market is a testament to the company’s investment acumen.
As the firm continues to navigate the complexities of the global economy, the successes of Ola, Unicommerce, and Brainbees in the Indian IPO market demonstrate that SoftBank remains a formidable player in the world of technology investments.
With more IPOs on the horizon, SoftBank’s strategy in India will likely continue to draw attention from investors and industry observers alike.
