SoftBank Group Corp. (9984) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. We'd like to start the SoftBank Group Corporation Investor Briefing for the 6-month period ended September 30, 2021. First of all, I'd like to introduce the representative from SoftBank, Mr. Goto, Board Director and CFO; Ms. Kimiwada, Corporate Officer, Senior Vice President and Head of Accounting Unit; Mr. Navneet Govil, Managing Partner and CFO of SoftBank Investment Adviser from the U.S. This session starts with the overview of our consolidated results by Ms. Kimiwada and the finance update by Mr. Goto, followed by SoftBank Vision Fund update by Mr. Navneet Govil. [Operator Instructions] Materials for today are available at our corporate website. Now I'd like to invite Ms. Kimiwada to talk about the consolidated results. Kimiwada-san, please.

Thank you very much. Good morning, ladies and gentlemen, starting from accounting presentation. Page 2, consolidated results, which we announced recently. To remind you, net sales up from the previous quarter. And net income JPY 363 billion compared to last quarter, JPY 1.5 trillion down, mainly due to -- as you can see in the breakdown at the bottom, loss on investments were huge this term, that's the main reason behind the negative number. On the other hand, starting from this number, independent segment, which is LatAm Fund in the second quarter, investment gain was booked 1.9 -- excuse me, JPY 193 billion, that was the LatAm Fund segment. Next page, just to remind you the segments. Last year, FY '20, LatAm Fund was included in other section. And earnings before tax exceeded 10% of the total, that's why LatAm Fund has become independent segment. And also major subsidiaries, including PayPay and Fortress are in other segments. Next page, Page 4, looking by the segment. Gain on investment at investment business of holding companies, which include a lot of stuff -- maybe this chart is busy, but the major items include SB Northstar growth and gain. And if you look at the dotted line in blue, what I'm talking about and also investments held by SBG and SBGI, which includes T-Mobile, Alibaba. With regards to T-Mobile and transaction related to T-Mobile shares, I will come back to later. For this term, in exchange for share to T-Mobile shares, we received Deutsche Telekom stocks. But the transaction for this term did not impact a lot on our P&L. And when it comes to WeWork, unrealized gain or loss around WeWork, JPY 405 billion, reclassified to realized gain or loss recorded in the past fiscal year. WeWork shares held by investment subsidiary will transfer to Vision Fund 2. Accordingly, from a segment perspective, a gain was recorded. But from the consolidated perspective, there was an intercompany transaction between subsidiaries. So elimination or adjustment was done accordingly, just to remind you. Other thing I just wanted to point out here is investment by investment subsidiary, Alibaba still remains a big part. But if you look at the bottom, the relative gain or loss, JPY 621 billion (sic) [ JPY 623 billion ] income on equity method investment related to Alibaba. So from derivative perspective, we see the positive number due to decrease of Alibaba share price. From consolidated accounting perspective, equity method treatment is applied. Even though Alibaba share price goes up, it does not get reflected on P/L, but from derivative perspective, if share price goes up, we see a positive number, which is reflected on our book, which remains the same for the last 2, 3 years. Moving on to next slide. Partial sales of T-Mobile shares in September 2021, and the movement of the number of shares held is shown here. You may already be aware of this. As a result of the transaction in September, currently, we own T-Mobile, 4.9% and Deutsche Telekom, 4.5%. And shares are recognized and valued at FVTPL. But when it comes to T-Mobile sales, there is a derivative transaction engaged. So some portions are eliminated. Next page. At the end of June 2020, we handed over call options to Deutsche Telekom. And in September this year, part of that was exercised by Deutsche Telekom, which means we sold T-Mobile shares to them. As a result, as we can see on the chart, gain or loss on the shares we sold are shown here, but the shares that we still own will be reflected on the next slide. If you take a look at the right-hand side, compared to a T-Mobile share price, it has increased compared to as of June last year. We handed options call and long to Deutsche Telekom. And we recorded JPY 13.4 billion loss after the transaction. The next shows, talking about T-Mobile shares that we already still -- we still hold. T-Mobile shares fair value also is shown on the slide. You can see a value by different colors, light blue shows an exercised portion of options and gray shows derivative financial liabilities. And when it comes to option, not subject to option is shown in the blue. So when all options are exercised, we're not going to see the dark blue anymore. And next slide is talking about, again, T-Mobile shares. At the time of Sprint and T-Mobile merger, contingent consideration was agreed between the parties. When it comes to contingencies or what the conditions that we are talking about, as you can see on the left -- top left side, 45-day trading VWAP of T-Mobile shares, $150 or over during April 1, 2022, through December 31, 2025. When those conditions are met, we have the right to acquire 48.75 million T-Mobile shares. And every financial term, fair value is calculated. And in principle, as the share price goes up, the fair value should go up as well. As of second quarter fiscal year 2021, fair value of T-Mobile is 4.7 -- excuse me, JPY 4.6 billion. Next slide is talking about WeWork. Again, sorry about this busy slide. As we have disclosed before, on SBG consolidated basis, as you can see on the slide, we have invested JPY 10.9 billion into WeWork. Penny warrant was included in the book value as well. At this moment or as of September end, fair value was JPY 4.46 billion. And as I explained earlier, WeWork shares were transferred to Vision Fund 2. So currently, WeWork are held by SoftBank Vision Fund 1 and 2. And again, fair value was JPY 4.4 billion. And cumulative gain or loss -- or loss actually in this case was JPY 7.3 billion, still a big loss from a cumulative perspective. For accounting treatment, the common stock held by SBGI, to that, equity method was applied and equity method will continue to be applied to the common stock. Moving on to Slide 10, please. Investment in listed stocks and other instruments, main impact on B/S and P/L. Primarily, we are talking about Northstar, transaction and balance both down from the previous term. Next slide, Page 11 is talking about Alibaba. Alibaba prepaid forward contracts and derivative gain or loss on those contracts for the second quarter. Due to decrease of share price, from a derivative perspective, we see gain JPY 734.8 billion. After considering a tax, 5.28 -- excuse me, JPY 528 billion. We are not talking about cash tax, we are talking about deferred tax expenses. That was Alibaba. And Slide 12 and onwards, a few slides we'll be talking about Arm. As you know, there was a transaction between Arm and NVIDIA. And when and if the transaction is completed, well, the result would depend on share price of NVIDIA at the time of closing. So you can see in this chart, those numbers may be plus alpha or minus alpha. And Page 13, again, just to remind you how we treat from a consolidated perspective. So again, from a consolidation perspective, Arm is a subsidiary. In the case of subsidiary, even though the valuation goes up, we don't capture. When -- only when valuation goes down, we pick up. The current three Arm valuation has gone up. But from consolidated accounting perspective, that increase is not reflected or picked up. But in Vision Fund segment, that uplift is reflected in the Vision Fund segment. But again, from consolidated accounting perspective, that is eliminated. We are not sure how long it will take for the transaction to be closed, and when it's closed, Arm will not be consolidated anymore. But when -- it is highly likely that the deal is closed, then Arm will be considered as discontinued operation. Up until then, we will keep treating Arm as continuing operations. Page 14 is talking about consolidated P/L summary, and major items are picked up on the right-hand side. I'm not going to go into details today. And if I may make the last comment, in my presentation, Page 21, please. This is talking about the core investment program to SVF2. In first quarter, we briefly explained about this co-investment program. The contract was signed and as of end of September, securities that will be created by this investment program have been transferred. Still in the process though. This is a transaction with significant party. So we disclose this information accordingly. In our financial reports, our terms and conditions related to this co-investment program are explained. So you can take a look when you have time. Net balance at the end of September 2021 was JPY 164.5 billion, the number should go by the quarter. So we will make a disclosure accordingly going forward. Thank you very much.

Thank you now. Mr. Goto will give you a financial update. Mr. Goto, please.

Good morning, everyone. This is Goto speaking. Thank you very much for your time today. A day before yesterday, we had our earnings results announcement, and I believe you have seen Masa's presentation. He explained when you look at this quarter, we have a net asset value, one of the most important KPI for our management, which was JPY 6 billion -- or the JPY 6 trillion reduction for the quarter. So this was quite a tough quarter for us. So that's why you saw the blizzard slide by Masa's presentation. But having said that, if you look at the numbers closely and also look at the status of our group from the different aspect -- a different angle, that may give you some different understanding. And unfortunately, I have to say that our SoftBank Hawks baseball team did not compete. They weren't reached #1, it was #4 ranking. But now we're having youngsters, young players here coming and growing. So they are growing. And so I believe that they will be playing well in next year. So with such young talent in the side for such talent are actually well cherished or we're making -- encouraging them to grow. So that can be also said to our business, and with the level of the size of the investment and also based on the level of the growth stage of those, I believe that we are in the good trend in terms of growth. And that's something that I hope I can explain to you through my presentation this time. So let me go into my slides. As you see, this is the summary for first quarter to second quarter. Three highlights that I would like to express with this occasion. First, results and net asset value, mainly the public securities, especially for those Chinese portfolios, a reduction or the loss is relatively large impact to us. Net asset value about JPY 20 trillion level as of the end of September. But since then, towards October to November, as of November 8, we have recovered to JPY 22.1 trillion for net asset value. And the investment activities, new investment-wise, Vision Fund, mainly Vision Fund 2, is making about JPY 30 billion investment -- $30 billion, excuse me, investments and also $2.3 billion from Latin American fund as the new investments. And also, we had a good monetization from those that we have invested in the past from both from Vision Fund 1 and 2. Mainly from Vision Fund 1, we have about $16 billion total from sales and monetization of investments. And for the distributions, we are also receiving as LP of total $8.7 billion from Vision Fund 1 and 2. So such distribution are used for the new investments. So this is -- this has been recycled. And the main reason for reduction for public securities value is from Alibaba and the ownership stake of Alibaba is always seen as a kind of a negative aspect, which -- because we have quite a large portion of exposure to Alibaba has been seen as negatively. However, this time, our Alibaba shares of equity value of holding is now 28%, so we are below 30% now. So that means that I believe we are well balanced, well diversified in terms of portfolio. And lastly, the financial activities. As you -- we have communicated to you several times, the financial disciplines that are based on the assumption that we are keeping all those disciplines in -- with good headrooms that we would like to manage and operate our business so that cash position -- excuse me, the fund, procurement-wise, issuance of foreign currency notes, JPY 814 billion and domestic subordinate bonds of JPY 500 billion. Also, we have done asset-backed financing using Alibaba shares and T-Mobile shares. With those financing, our loan-to-value is 18.7%. Cash position, JPY 2.8 trillion. This is a very, very safe level that we are managing our business. And let me also explain to you our investment activities of the group. This is a big picture of our investment activity. No big change. SoftBank Group, on your left-hand side. This has existing investments using our own balance sheet, mainly Alibaba, Arm, SoftBank Corp. and T-Mobile. And from the fund activity, Vision Fund 1 and 2. For Vision Fund 1, investment period is finished so that we are in a fruitful stage, and Vision Fund 2 is now making investments. LatAm Fund is making a good performance. Another thing is SB Northstar, which mainly is focusing on public securities, which I will be touching this on later. But mainly, we are downsizing for the activity of SB Northstar because right now that we would like to prioritize our investment into private securities instead of public securities. So our first priority is to -- for the investments by Vision Fund. Gain and loss on investments and net income. Just for your reminder, gain and loss on investments minus JPY 395 billion at this time. But on your right-hand side, net income, JPY 363 billion positive. So this is the number from the earnings results. And this is the trend and breakdown for the gain or loss on investments. On your right, when you look at the breakdown, you can see Vision Fund 1 and 2, mainly from the public securities loss, JPY 879 billion, which is the largest portion. In the previous quarter, the Coupang was making a good -- improved pricing, but that has been adjusted in this quarter. So that's one big impact. Another thing, when you look at those positive number, for example, Lat America funds, actually, quite a large gain on investments compared to the size of the fund itself and also T-Mobile, JPY 77 billion, Northstar also made a gain on investment by JPY 68 billion. This shows the equity value of holdings. Second from the right bar graph is the end of September, so second quarter results. On your far right, this is the latest as of November 8 number. So please don't confuse. So that -- as of November is JPY 26.9 trillion for the equity value of holdings. So compared to 6 -- 12 months ago or 16 months ago, that you see some balance of the diversification has been changed and actually improved, so well diversified recently. That you can tell from this bar graph. Especially Alibaba, if you can see, this also is a negative effect for our market cap, but at the same time, the other -- like the Vision Fund, LatAm fund, about 300 portfolios are there in the -- of course, not everybody, every company is going to go public, but they are going public or they can make a good growth even being a private company. In that time, I believe that can give us even better liquidity -- flexibility for the liquidity by having mainly public securities. Net asset value. So this deducting recourse debt and -- show you the effective capability, JPY 22.1 trillion as of the end of November 8, but the quarter end was JPY 20.9 trillion. So about 2 years ago, I believe that the net asset value has been recovered. But mainly due to the share price of Alibaba, we saw share price increase and decrease has been affecting our net asset value here. On your right-hand side, net asset value per share and our share price. So roughly about JPY 12,000 per share, I would say, but our share price is around JPY 6,000. So this discount mainly coming from Chinese issue, which makes market a bit uneasy to see our base or capabilities. So for that, how are we going to address is the one issue, and that came to us on the conclusion of buying back our own shares. And this gives you the -- some different angle for equity value of holdings. So on your left-hand side, last year, March end, as you can see our Alibaba accounts for 48% back then. But do you see the purple pie, Vision Fund 1 and Vision Fund 2, adding those 2, gives you 11%. So Alibaba, just 1 company, 1 logo 48% and Alibaba is -- excuse me, Vision Fund 1 and 2 at 11%. But on your right-hand side, this is September 8, Alibaba accounts for 28% so that -- but on the contrary, Vision Fund 1 and 2 and LatAm, that gives you 39%. So almost 40%, excuse me. So our fund activity has grown by 4x. I believe this diversification is quite a big agenda for us, when you look at the fund activities. And I believe that this gives you better or more comfortable -- give you more comfortable feelings in terms of our diversification. And this shows the cumulative performance by Vision Fund 1 and Vision Fund 2. Vision Fund 1 investment is almost end and the invested amount -- or investment cost is $88.2 billion and the cumulative investment returned $137 billion. So as of today, making a very good result. And the orange portion is exited portion, and also light blue is currently held and listed. So if you see the orange and the light blue added together, that's quite a large portion for Vision Fund 1. That gives you the healthiness of the fund activity. And on your right-hand side, Vision Fund 2, which is mainly right now the investment activity is conducted. Investment cost $33.9 billion and the cumulative investment returned is $37.9 billion. We just spent a few months to start the Vision Fund 2 activity. So that's why that the orange and light blue is still small, but we are expecting this to grow going forward. I will touch on this later again, but there are many -- some of the portfolios, one after another that are officially announcing IPO and so on. So that's exciting. And this is the by region and by sector. On your left-hand side by country, region. China in Vision Fund 1 and 2 has invested 19%, 1-9, and the U.S. 35%. Others, which includes Asia, Europe, Latin America gives you 46%. The future trend of this investments, we are relatively conservative in terms of investment in China. Of course, if it's a good opportunity, we would like to seriously study, but we're relatively becoming more conservative than before when it comes to investment in China. And that will be given or allocated to the other areas. So the red pie would be reducing gradually or instead, the blue and the green pies may increase. And if you see by sector, e-commerce -- excuse me, the consumer is still large. But logistics, transportation, fintech, real estate, they are as many sectors that we've been investing. One common agenda is artificial intelligence, and they are all keep in mind the artificial intelligence power for their business to grow. Vision Fund 2 investment compared to Vision Fund 1 era. As you can tell from this slide, there are big change. Actually, Vision Fund 1 had quite a big or large investment. But actually, the ticket average size is $0.9 billion. So one investment at a time was quite large. On the contrary, Vision Fund 2, the ticket size -- average ticket size is $0.2 billion. So it became a smaller. So as you see on the bottom, the number of investments, 92 cases for Vision Fund 1. And right now, 152 investments being done by Vision Fund 2. So there is an increase of the number of investments. That gives you the diversification. And at the same time, we've been trying to make sure we don't lose any investment opportunities. So by reducing the average ticket size that we try to make sure that we cover all those investment opportunities as much as possible. In Vision Fund 1 and 2, as you see, in total, JPY 29.7 billion in total dollars has been invested. New investment that you can see, mainly coming from Vision Fund 2. Some of them are already well-known company. And this shows the pace of the growth for such investments. So first quarter and second quarter in Vision Fund 1, 4 companies went public; in Vision Fund 2, 5 companies went public. Fair value-wise, Vision Fund 1, $8 billion; $1.7 billion for Vision Fund 2. So this made quite a large success result already. Third quarter and after, actually, many companies are already officially announcing its IPO; 8 companies in Vision Fund 1, 9 companies in Vision Fund 2, of which 3 companies already have listed in Vision Fund 1. And also 4 companies have listed in -- amongst Vision Fund 2. Recently, AutoStore went public and actually, the share price after its IPO is growing quite well, which makes us very happy about. In monetization, in second quarter or up to second quarter end, in total, about $16 billion of sales and monetization has been done, and this has been distributed to LPs. From Vision Fund 1, about $13.4 billion and also $2.3 billion from Vision Fund 2 because there are company which went public already. So such divestments or monetization and distribution. This shows the kind of cycle of investment and recovery. So on left-hand side, gray portion, about JPY 3.3 trillion has been contributed to Vision Fund 2, and we have $0.3 billion to Vision Fund 1. So about $27 billion or JPY 3 trillion level of the contribution in total to Vision Fund 1 and 2. On your right-hand side, we have received already JPY 1 trillion and more of the distribution from Vision Fund 1 and 2. And also, we have repayments or the return from the SB Northstar, which is JPY 475 billion. So with those 2, we have about JPY 1.5 trillion. So this is almost half of the investments that we have contributed. Other than that, we have some assets financing used such as only with, for example, Alibaba share financing is JPY 474 billion. And also, there are other debt financing that we can utilize, so partially from there and also other monetization or divestment. So there are many ways or diversified ways that we are financing for the investments contribution. So with that, we believe that we will be able to stably manage our loan to value. If we try to raise all from debt for such source of investments, then we believe that's going to be very negative for our financial policies. So we -- as an investment company, we would like to be prepared for any of the changes in the market, and we would like to make sure that we will be able to address such changes with our own status. Vision Fund 1 and 2 capital commitment as of September 30. Vision Fund 1, no change. About JPY 10 trillion. So the fund size, JPY 10 trillion and SoftBank Group, our contribution is 33%. On your right-hand side, Vision Fund 2, we SoftBank Group and we have management of 2.6% -- excuse me, $2.6 billion. So growth-wise, $33 billion in growth and Vision Fund 2, the money we have invested is about $40 billion. So Vision Fund 2 actually has a higher amount from SBG compared to Vision Fund 1. And as Ms. Kimiwada mentioned earlier, co-investment program to Vision Fund 2, I'm not going to go in much too detail, but -- so there are 2 buckets that -- which can be a target for the management investment and not for the management investment. So since the fund start, this co-investment program was established in the middle of the process, therefore, the starting point is different. So we don't want the management to cherry picking just a good portfolio of companies. Therefore, anything that went public already or anything that has already officially announcing its IPO has been separated and put it into the left bucket, which kept in Vision Fund 2, so that this is -- these are not a target for the management co-investment program. So based in principle that there is new investments but there are some companies that we can evaluate with fair market value with preferred equity, then that's going to be also put it into right-hand bucket, which will be target for the co-investment program for the management. In different subject, share swap agreement with Deutsche Telekom regarding T-Mobile share. Based on this agreement, there are 3 things, diversification of exposure in telecom business. This is going to be not only Japan, but to Europe and the United States. And they have a good customer base services that can be very much well used as a part of our class of #1 strategy. And the synergy with SBG portfolio companies is another benefit. And thirdly, giving us financial flexibility. Originally, we still need to wait for another few years until the transaction close. However, with this time -- agreement, we will be able to use Deutsche Telekom and T-Mobile shares for financing and hedging purposes. So that can be available in prior to the transaction close of the original schedule. In the SB Northstar, I've been making the same message from the previous quarter. So this is the management of the excess cash of ours for the investment, but private equity is very -- private equity market is very good so that we would like to allocate more to those private securities market, which is Vision Fund activity. So outstanding balance of the SB Northstar is decreasing. So when you see far right of this slide, impact on net income attributable to SBG is almost breakeven. The total of the investments, total investment cost is JPY 164.7 billion negative. But because Masa also participates in the investment, which is actually a good hedging by Masa for SoftBank Group. So I will say thank you for Masa about this. But anyway to the next slide. This is the trend of downsizing in Northstar. So public securities investment through Northstar has been a good expertise that we've been able to build. So not only Vision Fund, of course, the Vision Fund focuses on private securities and Northstar invest in public securities, and I believe this was a good expertise and know-how that we were able to build through this activity. So I believe this vehicle is very good for us in terms of such expertise building. So our main investment allocation is going to be private securities, but still SB Northstar is one of also important vehicle for our group activity. For second quarter in bond market, we had issued foreign currency denominated senior notes in July. And for domestic market, we have issued JPY 500 billion of subordinated bonds in September. For hybrid note -- hybrid bonds, we have issued from January to March this year, and there were existing bond, which was issued 2016 and many investors were asking us whether we're really calling and we want to keep telling them that we will be keeping words. And at the first call, we made an early redemption of these domestic hybrid bonds. And the next is asset-backed financing. So the so-called collar transaction and the forward contract, JPY 823 billion. And also financing using T-Mobile share, similar collar transaction or a margin loan repayments and new contracts, JPY 150 billion, net-net. So loan to value, which is very important and highly focused by credit investors, we believe that 25% is a threshold that we would like to manage and September 8, 18.7% loan-to-value. Unless we see extreme change of market, we would like to make sure to keep managing our loan-to-value less than 25%. Our mid- to long-term forecast, we are always keep in mind for this loan to value. So any investment activities, including buyback, whenever there is any investment activities, we always keep in mind we have a safety headroom for loan to value. So the loan-to-value this indicator became and has been the most important source for us to decide any investment activities. And another financial policy or financial discipline for us is cash position in addition to loan-to-value. So 2-year coverage of this bond redemption. And for the second quarter, JPY 2.8 trillion. So over 2 years, about JPY 1.6 trillion for this time for the bond redemption. So actually, that -- we are covering for 3 years, almost 3 years. And the -- not only the cash position, but also pay interest expense and the independent -- excuse me, dividends, which is interest coverage ratio on your right-hand side, is another indicator often we discuss at the credit investors meeting. So on your right, this dividend from SoftBank Corp, JPY 164 billion. And in addition to that, we have a distribution from Vision Fund 1 and 2, which is JPY 979 billion. And our interest expense is JPY 249 billion, so that the interest coverage ratio is 4.6x, which is a very safe level. The right-hand side distribution from Vision Fund 1 and 2, can we add this or use it for the interest coverage calculation? That's one discussion. But as far as we can make a steady distribution for -- from Vision Fund 1 and 2, and if we can make a good track record for that, then I believe that there will be no any argument regarding adding such distribution to the calculation for the interest coverage ratio. So receiving such steady distribution has been almost established as well. That's something that we see, and I believe such amount should be included to our interest coverage ratio. That's more to show our real position. Redemption schedule. Next year and the following year, relatively calm. And whenever there is any redemption, so we -- as our financial policy show covers more than 2 years redemption, so we can redeem if we wish to, but also, we will be able to provide similar or better products to investors so that the investor can choose. So for that, we would like to maintain in safety level of such position. From a financial point of view, we would like to improve the status, but at the same time, we believe we will be able to lever as well so that by seeing the good improvement of asset value, also receiving a steady distribution from Vision Fund, once we built such a good track record, then even we increase the debt level, but still, we believe we will be able to improve our financial KPIs. Interest-bearing debt, SBG stand-alone. So excluding nonrecourse financing, which is almost flat from the previous quarter, Northstar size itself has been downsized. But at the same time, repaying the debt has been a good effect. Cash position, for your reminder, and this shows net debt. Dark blue portion is the net debt. Nonrecourse financing has been fully utilized for us. Therefore, with recourse net debt, it's actually reducing which is another way of saying that our financial healthiness is there. Financial strategy. As I have already mentioned earlier, we are firmly keeping our financial policy. So this would be the -- always a starting point when it comes to the budget for investment or how far can we challenge in terms of diversification of our business, so that's -- everything comes back to here. And this is for your recap on financial policy, managing LTV below 25% in normal times and up a threshold, 25%, even in times of emergency. And also maintain funds covering bond redemption for at least the next 2 years, secure recurring distribution and dividend income. So this will be our financial policy for this year again. For portfolio or the investees, we've been keep communicating this since the WeWork issue. We have explained and clearly mentioned that we believe that we have to have a portfolio company financing the self-financing and no rescue package. And financial management to enable reproduction at investment business on expanded scale. So we will invest and we will recover those and use it for the recycling for new opportunities. So that itself is actually improving our balance sheet and not only using for the new investments, but based on that, we can lever then while keeping safetyness of overall, we will be able to increase -- we will be able to grow at the same time. So last year when we launched JPY 4.5 trillion program, asset monetization has been used for return to shareholders, return to bondholders and the new investment opportunity. So we made it a well-balanced allocation. And distribution from investment can be also another big source for that. So SoftBank Group as a stand-alone, even if we don't do any big M&A or investment, but as far as we can see the steady distribution through the fund activity, then that not only be used for the new investment, but can be useful for return to shareholders and return to the bondholders. So we always keep in mind for the mix -- this mix of those 3 factors for us. And for that, we -- within the safe level of LTV, we would like to utilize our leverage. That can be a good way to provide the financial instruments to the market so that we will be able to access to the variety of the investor base. And at the same time, we have -- we -- that can be a good dialogue with the market for them to understand the safetyness and appropriateness of our financial products to the market. Lastly, for this section, the share buyback has announced. I believe that they've been already well understood by the market. Total amount, JPY 1 trillion in maximum. And the period is for 1 year. So this is till November 8, 2022. This has been resolved by the Board of Directors meeting. And which timing are we going to buy our shares? First, loan-to-value has to be formally kept and also cash position is important. So as far as we can manage this in a safe manner, then we look at our level of investment opportunities. And then what is the level of the NAV discount. So based on those considerations, we would like to buy back our shares, aiming towards JPY 1 trillion for 1 year. But as Masa mentioned, I believe that the market has an impression that we always buy our shares up to the maximum level. But I believe for investors point of view, safetyness is the most important thing for the company so that we don't want to make too much stretch to buy our shares to JPY 1 trillion for this period. And at the same time, we have a flexible investment. We have many investment opportunities, then which we should be prioritized, that's something that we always need to discuss amongst management and then decide which way to go. And last but not least, on my presentation, ESG initiatives for the first half of this fiscal year. Since we are an investment company, companies in the portfolio, we want to make sure that we have a strong governance and policy in place in those companies that invest. And we need to clearly state in the group policy that environment and social risks and opportunities shall be assessed in the investment process. We are working on that at the moment. The road map is shown at the bottom of this slide. Next slide. Investment in environment and social areas. From SoftBank Vision Fund 2 and from LatAm and SB Opportunity Fund, they have invested in a lot of businesses that are addressing environmental issues and social issues, for example, climate change and discrimination. Through investment activities, we want to contribute to ESG. And next slide shows, again, initiatives. And Masa-san wants to contribute to the society. When needed, we want to do as much as we can. And what's urgent at the moment is COVID-19 from virus perspective and vaccine perspective. Recently, Japanese government has been talking a lot about a booster shot. So we're going to help as much as we can to address this COVID-19 challenges. And last page, ESG plans for the second half of FY '21. We're going to establish an operating process for integrating ESG factors into investment process. And also, we want to disclose climate change information in line with TCFD. We want to be a part of a leading effort to address this need. And also, we want to strengthen response to human rights risks. And also, we want to raise the level of the SBG in terms of ESG. So last but not least, we would like to invite Mr. Navneet Govil, CFO of SoftBank Investment Advisers, to give you an update on SoftBank Vision Fund. Navneet, please unmute and start your presentation. Thank you for waiting.

Yes. Hello, everyone. Hopefully, you can hear me.

Yes, we can.

Before we get started, Please take some time to read the SBIA legal disclaimers on Slides 2 and 3 and refer to the online presentation for more details. For more information on the Vision Fund, please visit visionfund.com or follow the SoftBank Investment Advisers page on LinkedIn. As Slide 4 indicates, today, I'm going to summarize our key performance highlights and the financial impact for the September quarter. In the In-Focus section, Powering the Innovation Supercycle, I'll discuss how our growth equity platform has been built to support the ongoing AI revolution and how this thesis translates to capital deployment. By way of an example, I'll touch on 5 categories of companies within our portfolio: cybersecurity, e-commerce, talent solutions, autotech and retail. Let's begin with a summary of our progress along with some highlights from the last quarter. Slide 6 shows that we've made steady progress building the platform's assets under management since the launch of the first Vision Fund in May 2017. The funds have demonstrated remarkable resilience and adaptability, and we remain confident of the outlook, even accounting for volatile global macro trends or regulatory changes in individual markets like China. Our total assets under management stood at $176 billion as of September 2021, marking an unprecedented investment commitment to the company that we believe are driving the AI revolution. The Vision Funds were founded on a fundamental belief that a new generation of disruptors would see transformative growth. We believe we are both enabling and participating in this trend as investors. Here on Slide 7 are some of the highlights from the September quarter across Funds 1 and 2. We continue to deploy capital with conviction. 2020 and 2021 have been unpredictable, but we've navigated this environment with confidence in our long-term thesis. Our team has continued to deploy capital in dozens of companies where we see potential upside. We made 67 new investments as we continue to back a growing ecosystem of innovative businesses across a diverse set of geographies and sectors. Within our private portfolio, 11 companies raised follow-on funding from new investors at higher valuations, marking their continued progress and increased interest from third-party institutional investors. We invested $14 billion, reflecting our belief in a crucial period of technology-driven growth with incumbents being disrupted by innovators. Finally, we continue to make meaningful distributions to our limited partners, including SoftBank, returning a further $9.8 billion in the most recent quarter. Let me provide a snapshot view of the growing Vision Fund 2 portfolio laid out here on Slide 8. Incredible businesses are being built and scaled everywhere. The last 5 years have seen the democratization of innovation made possible by enabling technologies like artificial intelligence. Let me give you a sense of the diversity within this growing portfolio. IonQ is building the next-generation computing platform, quantum computing. WHOOP is providing technology to athletes in all levels through health tracking. Nature's Fynd is developing alternative proteins for a $1 trillion market, food. And [ Vita ] is building a new tech stack, enabling banks to innovate faster. As the portfolio progresses, we are beginning to see meaningful cumulative gains. From inception in late 2019 to September 30, Vision Fund 2 has delivered unrealized gains of $4.7 billion on acquisition costs of $33.2 billion, a material uplift for a fund still in its second year of investing. Next up, I'll walk you through the current portfolio in more detail. Turning to Slide 9, the Vision Fund 2 portfolio now stands at 158 investments, the vast majority of which, 149, are private. We've already exited 1 investment, Vividion, and 8 companies within the portfolio are now publicly traded. So far, capital has been deployed into 9 sectors. 23% of our capital has been invested in consumer businesses, 15% into fintech and 13% into logistics. We have deliberately constructed a portfolio that's highly diversified, which we believe gives us access to a broad mix of secular technology and consumer trends while optimizing our risk return profile. This theme of diversification continues when you look at the geographic trends. As an investor, we combined global investment capabilities with local expertise through our 10 offices around the world. This is reflected in our capital deployment. 42% of our capital has been invested in the Americas, with 28% in EMEA, a substantial allocation to the region. In Asia, 15% of our capital has been deployed in China, 9% in India and the remaining 6% across additional Asian markets. As I mentioned, 8 companies from Vision Fund 2 are now public. But let's step back. We're pleased to report that across Vision Funds 1 and 2, there have now been 25 total listings since inception. As Slide 10 indicates, the MOIC on companies that have gone public is significant. Within this group, there are some stellar performers, the likes of Guardant Health, 10x Genomics, DoorDash and Coupang. We believe that as other private portfolio companies go public, we will generate meaningful returns. Let's move on to Slide 11. So more listings and more investment activity, what does this mean for the overall structure of our portfolio? Looking back over the past 12 months, there is a simple trend, more exits and more realizable public value. The amount of the portfolio made up of exited or public companies has increased from 28% to 54%. As I've previously said, we believe that when our portfolio companies go public, they often stand to benefit from higher valuation multiples. As more of our companies go public, they also give us the flexibility to monetize those assets and deliver distributions to our LPs, including SoftBank. Today's constructive public market -- public capital markets have provided strong companies with the right environment to raise the capital they need. Here on Slide 12, we show 6 listings that took place since quarter end. The variety of these businesses from autonomous vehicle platform, Aurora, to life sciences innovator, Exscientia, and warehouse automation business, AutoStore, is another sign of the diversity of our portfolio. As Son-san has said before, winning companies need capital. Across our portfolio, companies continue to attract capital to fund their ambitious plans for growth and innovation. Slide 13 shows that the most recent quarter saw 11 follow-on funding rounds for growing companies in the portfolio, many of which were led by third-party institutional investors, cumulatively raising $3.4 billion. This metric matters. It's a sign of continued progress, validation of their business models and continued delivery. As a result, these portfolio companies increased in value by over $23 billion. The Vision Funds were created to fund a portfolio of disruptive technology companies and return capital to our investors, enabling the cycle of innovation to continue. As demonstrated on Slide 14, we're making good on that promise. Since the launch of the first Vision Fund, the amount of capital we've distributed back to our investors has steadily grown. We were able to distribute more than $5 billion to investors in our first full year of operations, 2018, increasing to $9.9 billion in 2019 and $13.4 billion in 2020. 2021 has seen continued progress and cumulative distributions now stand at $35.6 billion. Let me walk through the implications for Vision Fund 1. As you all know, the fund was structured into preferred equity and equity. To summarize, the fund raised $98.6 billion, of which $88.1 billion has been drawn. We have returned almost half of the preferred drawn capital. As we continue to return preferred equity, the 7% cost of servicing the coupon is reduced. Repayment of the preferred also positioned SoftBank for a greater share of future returns. Let's conclude the section on Slide 16 with a simple snapshot of the combined performance of the funds to date. SoftBank Vision Fund's 2 commitment has now increased from $40 billion to $51 billion. This illustrates our conviction that a new generation of transformative businesses will reshape the global economy. Our total acquisition cost of $119.9 billion, our cumulative investment gains now stand at $56.1 billion, total fair value is $176 billion, and we have distributed $38.8 billion across both funds. Before we dive into the In-Focus section, I'll summarize the financial impact of the fund performance on SoftBank. Beginning with Vision Fund 1, from inception to September 30, 2021, fund net profit was $34.8 billion, of which SoftBank share was $17.8 billion. SoftBank's income from management and performance fees was $8.9 billion. The total contribution to SoftBank, net of third-party interest, was $26.7 billion. Here on Slide 19, we've laid out where we began with paid-in capital and where we are today in terms of total value. SoftBank contributed $27.4 billion to Vision Fund 1. As of September 30, this figure had grown to 30 -- sorry, as of September 30, this figure had grown to $53.4 billion, comprising $38.4 billion in unrealized net asset value, $6.8 billion in realized distributions and $8.2 billion in accrued and paid performance fees. On Slide 20, we provide the equivalent data for Vision Fund 2. SoftBank contributed $34.8 billion to the Vision Fund 2. As of September 30, this figure has also grown to $39.3 billion, comprising $35.2 billion in unrealized net asset value, $3.2 billion in realized distributions and $0.9 billion in accrued performance fees. That concludes our performance and impact summary. In this quarter's In Focus section, I'm going to discuss our unique growth and equity investing strategy and why is the right enabler for today's most disruptive companies. We'll also look at the VC funding environment more broadly and how the Vision Funds have ushered in the paradigm shift in growth equity investing. Like in other quarters, I'll also walk through our investment thesis and activity in a handful of sectors. The preferred asset class of the AI revolution is growth equity. In recent years, hundreds of new unicorns and group companies have been created with founders leveraging powerful technologies like AI. Their progress is accelerating because setting up and scaling a global business has never been cheaper, faster or more efficient. We provide the capital and insight needed to move these businesses through the growth stage towards enduring success. It will come as no surprise that growth equity is attracting global interest as investors from other asset classes seek to enter the space. Our portfolio, our capital and our global reach gives us what we believe to be a significant advantage. The founding ambition of the Vision Fund was to pioneer a new form of investing. This is what Son-san calls [ Vision Capital ]. Across every sector and geography, incumbent businesses and traditional services are being replaced by digitization. We invest in companies where visionary founders are leading powerful teams aiming to capture large addressable markets or create entirely new ones. Our role in the ecosystem is to provide emerging technology leaders with the patient capital, network connections and operating expertise to help them reach their goals. Technology-driven innovation is changing every industry on earth. And as a result, we're witnessing an innovation super cycle. Huge addressable markets and industries are being reengineered by technology. The founders building disruptive companies can do more with less, faster, and we have more capital being recycled into the system as each generation of technology winners moves to exit or IPO. To capitalize on this innovation super cycle, we're deploying meaningful checks, averaging $100 million to $200 million, into the company's [ re-back ], giving us significant ownership stakes across a highly diversified portfolio. As you know, we're building a portfolio around several key sectors, which you see listed here on the left-hand side of Slide 25. Today, I'm going to focus on 5 subcategories here on the right, that sit within these verticals, retail and supply chain management, cybersecurity, talent solutions, e-commerce and autotech. Turning to Slide 26, the first category of companies I'll discuss today is retail and supply chain management. We're backing innovators creating the future of retail and reimagining global supply chains. Today's successful retailers sell across all channels, off-line and online, and they rely on technology and data. Let me walk through some examples. Wiliot give retailers a cloud platform to track and monitor goods through their supply chain. Standard Cognition enables checkout-free shopping with computer vision and AI. Trax enables companies to optimize their real estate and inventory levels. The next category we'll discuss is cybersecurity, where I'd like to highlight 3 exciting new investments here on Slide 27. These companies are building where several megatrends meet. As more economic activity takes place online, fraud and bad actors follow the money. The global impact of cyber crime is enormous, with costs expected to reach $10.5 trillion by 2025. Finally, as more businesses embrace remote and distributed work, there is a huge need to secure corporate data. OneTrust secures corporate data because today's office is the start-ups, not a cubicle. Arkose Labs helps large platform companies minimize online fraud. And Cybereason provides real-time cyber threat intelligence to large enterprises. Let's move to the next category with Slide 28. The world is witnessing unprecedented demand for human capital. There is growing demand for solutions that help businesses manage talent, from hiring to onboarding to engaging with those employees. We have invested in a family of companies that help clients all over the world to meet these challenges. In many developed economies like the U.S., the post-pandemic bounce back is causing severe labor shortages, making it harder to find and retain talent. Today's winning companies have to find and onboard new employees quickly and need tools to do so. Andela, Eightfold.ai and Jobandtalent are each addressing this problem. The next challenge after hiring employees is to keep them engaged. Beisen and Skedulo are both providing solutions for their customers. Turning to Slide 29. The next category I'd like to highlight is e-commerce, the sector in which both Vision Funds have immense pedigree as modern retailing rebases around digital first or omnichannel models. We've recently invested in 3 e-commerce innovators. Meesho is India's leading social commerce platform. India's market is still early. Online retail spend represents only 5% of consumer spending. Trendyol is the foremost e-commerce platform in Turkey, our large addressable market with rapidly growing online retail penetration. Finally, Perch is buying up successful online stores from merchants and using data and technology to increase efficiency and accelerate growth. Finally, I'm going to discuss the transformation we're witnessing in autotech, where some very significant trends are playing out. Used vehicle sales is a large off-line and highly inefficient market which is seeing rapid digitization as consumers head online. Demand for used vehicles is high, both in developed and developing economies, driven by the continued global economic recovery. The result, the way we buy and sell vehicles is changing fast. We've recently invested in 2 businesses that are well placed to benefit. Carro in Southeast Asia is the largest online marketplace for vehicles, and we believe their trajectory is exciting. CARS24 is a thriving used car marketplace in India, where demand for vehicles among the country's emerging consumer base is rising rapidly. As we look back after 5 years, we've built a portfolio of thriving businesses around AI as a crucial enabling technology. We believe that we're making meaningful progress. We've built an unparalleled global ecosystem of emerging tech champions. We've seen numerous portfolio company listings enabling us to realize value. And we've returned a significant amount of capital to our limited partners and will continue to do so. As we discussed earlier, others are now deploying billions of dollars per year in growth equity. We believe that's a good thing. AI is unlocking new opportunities, democratizing access to new products and services for consumers all over the world. Today's founders need capital to fulfill this potential. This innovation super cycle is reshaping how entire markets function and creating new ones. And we believe our entire portfolio will benefit greatly. Thank you for joining us.

Now we'd like to have a question-and-answer session until 11:30 Tokyo time. [Operator Instructions] First, we'd like to take Japanese questions from Zoom webinar. For English questions, we will take after we finish Japanese questions. So please hold on a moment. First, Japanese questions. Any questions? First, Tsuruo-san from Citigroup Securities.

Two questions. First, about share buyback. It's [ needed ] by LTV level, I believe. So I assume that you expect some volatilities in a financial market. So what kind of discussions were made at the Board level with regards to volatility in the financial market, whether positive or negative? Because it's something to do with how you see the market from Vision Fund perspective. Second question, NVIDIA. Masa-san mentioned that NVIDIA's value has been growing. So just to make sure I understood correctly, if and when the deal is closed, what kind of conditions attached to NVIDIA shares for our cash monetization? And when you monetize from NVIDIA shares, how are you going to use that monetized return from the NVIDIA shares?

Thank you very much for your question. My name is Goto and try to answer your question. First, share buyback and also LTV and some conditions or some considerations we have. You are talking about market volatility, which, of course, we need to pay attention to. It's hard to comment on that because it's obvious that we need to pay attention to market volatility. And one of the concerns around our value is China risks, if you will. How much we should expect, some changes in the Chinese market or China issues. Since there are lot of uncertainties, rather, we want to make sure that we have fundamental policy that we stick to. There are risks, of course, in the market. And whenever any risks emerges in the market, we need to make sure that we comply with our principles disciplines. That was my answer to the first question. And second question, NVIDIA. Of course, we hope that our deal will be closed as expected. At this moment, there's nothing that we can disclose to you. But after the deal is closed, NVIDIA shares, listed shares will be added on our assets and NVIDIA shares, big in terms of liquidity and size and definitely are driven by AI. We are financing, taking advantage of assets that we have, and we believe that NVIDIA will add value to us, our asset class. And hope that, again, a deal is closed as expected. And hopefully, NVIDIA shares will be added to our value. Thank you.

Thank you for your question. Then I would like to take next one, Ando-san of Daiwa Securities.

Yes. This is Ando speaking. I have two questions. One, first is about buyback. So you announced buyback this time in NAV discount. According to material, 52% or so, I believe that was my calculation based on your material. And compared to previous case, I believe discount is a bit smaller than before. And that was a timing when you announced this time. So regarding this discount, NVIDIA, PayPay, those potential value has been included or not. That's my question. So for the NAV discount, have you include those NVIDIA and PayPay potential value? If you have such assumption, what is your estimate for such value of NVIDIA and PayPay? If you can share with us. That's my first question.

Goto speaking. Thank you for your question. Discount level is around 50% or so, I would say. And from Masa, he repeated the -- he stated that he is a major shareholder. So as on shareholders' position, he want to buy back, of course, because this is cheap. That's then comparted to last buyback. Discount level is better compared to the last time. Having said that, last year, we had JPY 2.5 trillion buyback, and the average acquisition cost was actually higher compared to the current share price. So that I believe, with this comparison, I believe that the discount is still large. Another thing is, as you said, Mr. Ando-san, that we have actual or effective enterprise value can be increased, including several potentials. I don't state any specific name of the company. Of course, you mentioned NVIDIA, PayPay. They, I believe, is a very attractive company as well. But that's also the case. But not only that, we have Vision Fund with a lot of portfolio companies where continuously blooming and such system has been established. So I believe that such an expectation on this system is something that we include to our enterprise value.

I have second question. Vision Fund, I believe, is going to be stably provide distribution to SBG or even could increasing distribution possibly. In that case, Vision Fund business will be in a stage that shows a good success. In the past, when you make a big M&A or investment success, then, for example, SoftBank Corp, Domestic Telecom business acquired and successfully resulted, you have increased the dividend. And as far as I remember, so in the long run, what is your view or policy on the share dividend for SBG?

Goto speaking again. Return to shareholders, I believe, as you mentioned, one way is dividend and buyback. And it's also important to see which is more preferred by investor, shareholders. And for the investor's point of view, shareholder's point of view, it's not all or nothing so that when you look at peers, including GAFA, they have rather focusing on the total return, but not the payout ratio so that that's something, the balance that we need to see. And dividend, we've been maintaining and slightly increasing in the past. We would like to explore the variety option of the return to shareholders that cannot be on the share buyback. Sometimes the other options also available, considering tax treatment as well, we believe that we need to explore the variety of the option for that.

Thank you. Next, Kikuchi-san from SMBC Nikko Securities.

Two questions. First, WeWork. Shares of WeWork were transferred to Vision Fund 2. What's the background or reason? Vision Fund 2, you are the, effectively, sole investor in SoftBank Vision Fund 2. So from segment perspective, it's different from investment company business. So again, the reason why we transferred WeWork shares to fund Vision Fund 2. So the difference between investment companies activities and SoftBank Vision Fund 2's activities, maybe I should ask Goto-san.

Thank you. Goto speaking. Internally, we had a discussion about which entity of ours should have what kind of portfolio. So what would be the most optimal portfolio held by our entities. We are implementing certain rules around that. And assets held by SBG alone should be closely related to our businesses. So synergy, I don't know if synergy is the right word, but assets that SBG should have, should have closely related to the businesses. And also small businesses should be held by SBG. And listed businesses should be, as we know, start and remaining would be private equity. So our principle is to have SoftBank Vision Fund to invest in private equities. So that's the background behind we transferred WeWork shares from our investment activity to SoftBank Vision Fund 2.

So going forward, Vision Fund should play a key role in investing in private equity and other will be held by SoftBank Group. Is my understanding correct?

Well, Goto speaks. You took WeWork as an example. And that's due to other stocks as well according to the rule. And if I may add one comment, fund to fund, in principle, should be done by SoftBank Vision Fund as opposed to SoftBank Group. That's our principle.

Next question is about share buyback. Last year, you carried out JPY 4.5 trillion in program. And the story back then was beautiful, if you will, exit JPY 4.5 trillion and also redemption of bond and also share buybacks. So story was beautiful and clear. In this program, I assume that you have some consideration, but we haven't heard a clear cash story. And also, we are trying to figure out how we should interpret when you say the share buyback may not end within 1 year. So JPY 1 trillion I'm talking about. Let's say you have JPY 3 trillion cash in your hand so that we can redeem our bond. In terms of exit, you can't decide how much you can get from exit 1 year or 2 year. So based upon the cash that you have or you plan to have, what kind of reason behind you make a comment about not being able to finish in 1 year?

So the term 1 year is set and approved at the Board level because of the rule, that's the fundamental precondition. And back in JPY 4.5 trillion, share buyback program, difference, biggest difference this time and last time was as follows. Back then, we announced monetization program of JPY 4.5 trillion and followed by share buyback plan. It was clear. So first, we enhanced monetization program of JPY 4.5 trillion, and breakdown was announced later. And this time, of course, we expect a lot of dividends and also we continue to monetize assets going forward. But this is something that we can't promise now. Even though we have not been able to promise, make a promise now, but we have the potentials in our hand. So we -- even though there are some risks we should anticipate, but JPY 1 trillion over 1-year period should be something that we are likely to complete. In terms of bond redemption, of course, there is no problem because we have JPY 2 trillion -- JPY 3 trillion. So conservatively, of course, once we announce, we want to execute. So that's why we want to make some comfortable number to be disclosed. But having said that, there are sort of uncertainties in the market, financial markets. So in that sense, we need to be very honest as opposed to overpromising. Some companies end up just announcing share buyback, but they might not be able to complete, but no follow-up at all. But so far, we have executed as much as we announced. But again, we don't want to make an excuse after we have not executed at all. So that's something that we want you to understand. We don't want to make any excuses in case when we end up not executing. Thank you very much. And this program is different from last time. So share buyback comes first as opposed to last time, share buyback plan came next to even bigger monetization program.

Like Ando-san mentioned earlier, talking about NAV discount. In the past, discount was higher at some point. So I wonder if there are any triggers that could have impact on that share buyback plan. For example, Goto-san mentioned China risks. So any factors that triggered or made you decide share buyback?

Goto speaks. I don't know how I should interpret when you say trigger. Well, China risk is what I mentioned in terms of discount. Like Ando-san mentioned earlier, NAV discount, 50%. Because it exceeds 50% of NAV discount, we should do a share buyback. That's not something we discussed. Let's say, discount is 50%, which is big for sure, but that is not really a trigger for us to make a decision. So if you take a look at the chart, not just consideration 3, but also consideration, 1, 2 are equally important, even more important. So those 3 are what we are looking at, at the same time to make a best balance or discount changes. Even though discount is 30%, we may consider it as high according to the market condition. Thank you.

Thank you. So I would like to take a question from the English line. CLSA, Oliver Matthew.

I have one question for Navneet and one for Goto-san, First question for Navneet. Could you share your thoughts about the level of distributions going forward from SoftBank Vision Fund 1? It seems to be increasing. Should we expect that to further accelerate from here? And the second question for Goto-san, should I ask now? Okay. Yes. Goto-san, from an overall financing perspective, could you talk about the pros and cons of having external investors for SoftBank Vision Fund 2 in the future?

Oliver, I can start with your first question on distributions. So it will really depend on a number of factors. It will depend on how many more public listings we have than the first fund. It will depend on where those are trading relative to our entry valuations and what kind of a return we can achieve. And then it will also depend on whether it's in a lockout period or not and how much liquidity each of those stocks have in the various exchanges where they are trading. But given the momentum we are seeing, we expect those distributions to at least continue at this pace or increase. Since we have another 7 to 9 years left in the first fund, we want to make sure that during the course of the life of the fund, we have made distributions to our limited partners. With that, I'll turn it over to Goto-san.

Yes. Thank you, Oliver, for your question. So as of today we are not considering to invite the third-party LP to our Vision Fund at this moment. And the -- as a company, while we're keeping our safetiness of the business, we can also provide the capital to the fund activity without any switch. Therefore, we would like to mainly keep this way because that will give us more flexibility. And also, I think that's quite -- make us comfortable to run this way. Having said that, I don't deny the possibility for inviting third-party investor for the future. In the process of our growth stage and in the future, we may consider inviting LP, third-party LP. There may be some time where it will be better to invite outside LP. I hope that answers your question.

Next, coming back to Japanese question. Masuno-san from Nomura Securities.

Masuno from Nomura Securities. Can you hear me?

Yes?

First question, actually, same question to Navneet and Goto-san, if I may. Our discussion has been focusing around the share buyback. And the share price goes up or down depending on share buyback program. And also NAV discount is another focus. Or NAV is discounted because of some uncertainties around your funds. Why there are uncertainties? Because in my opinion, distribution of sectors, regions and countries, in the case of SoftBank Vision Fund 1, they were not good at distribution, to be honest. For example, DD and Uber, interim sector and also a region. In terms of country risk, China, for example, exposure to China was maybe too much. That was probably the lesson learned by SoftBank Vision Fund 1. But when it comes to SoftBank Vision Fund 2, our ticket side is smaller, and you mentioned super cycle and innovation. So it's well diversified in terms of sector and regions and countries. Against the background going forward, how can you convince the market and investors to make sure they are confident about future of SoftBank Vision Fund 2?

So Navneet and Goto-san -- well, Goto-san wants to answer first, if he may.

In the case of Vision Fund 1, failure or success, it's early to say now, I think. Performance-wise, as you can see on the Page 10 of my finance section in the presentation, at this moment, this is actual performance. So I think they are doing pretty well. They did a good job, but are still in the process. So the darkest blue, which is indicating unlisted, so we need to wait and see how things go. But like Masuno-san said, yes, there are a lot of things that we should improve based upon the lessons learned. So in fact, because of the lessons we learned compared to SoftBank Vision Fund 1, SoftBank Vision Fund 2, the ticket size is 1/4, for example. Let's say, one ticket, JPY 100 billion on average, Vision Fund 1, but Vision Fund 2, JPY 20 billion, for example. And on Page 11, if you take a look at that, again, diversification is better now. When talking about our discount, I think our focus on AI is sometimes difficult for investors to value, positive or negative. So we need to show our performance is not technical issue, but also fundamental issue to address discounts. So Navneet, if you could follow on that?

I agree with Goto-san. As Goto-san said, Vision Fund 1 is 5 years old. Vision Fund 2 is only 2 years old. So ultimately, it's the results of both funds that should give investors confidence going forward.

Thank you very much. Did they answer your question, Masuno-san?

Yes. Yes, we can see better diversification in terms of sector, country and region and also there are lot of returns. So consequently, we are able to see a big return from Softbank Vision Fund 1. But going forward, more diversified is more comfortable from investors' perspective, so we should keep watching how things go.

I understand there are still more hands up. So can you leave it to one question per person? So we would like to take a question from Hoshi-san of Nomura Securities. Please make it -- make sure to ask one question.

Yes, this is Hoshi speaking. Vision Fund, I have a question about Vision Fund. Chinese portfolio, exit for Chinese portfolio that I would like to ask. So right now, after third quarter, there are some portfolio aiming for the IPO. And while Chinese portfolio, when they aim for IPO, I believe they will be preferred to choose Hong Kong stock exchange instead of U.S. stock exchange. Do you see any obstacles or do you see any challenges that those Chinese portfolio will be aimed to go public using Hong Kong stock exchange instead of U.S. stock exchange?

Navneet, do you think you can answer that question?

Sure. So we have to first -- some of these regulations are relatively new. We have to see how they stabilize over time. And the options to list in China are there. There are options to list in Hong Kong. And in fact, even in the U.S., it's possible. The only sensitivity is around consumer data. So companies that don't necessarily have the issue with consumer data, they can list in the U.S. as well. But let's see how the regulation stabilize over time.

[indiscernible] from [ Credit Security ] -- sorry, but that's the last question. This is the last question from [ Credit Securities ].

I have a question to Goto-san. As a CSO, Chief Sustainable Officer, you talked about ESG. And in disclosure of your initiatives, it's unclear for me how the governance works at the investment holding company level. So not only are the companies that you invest, but at the holding company level, how should we interpret? And though as SVF continues to grow, I think sustainability is very, very important. When it comes to engagement, engagement survey or royalty survey will be very important. So going forward, Goto-san, as a Chief Sustainability Officer, what kind of view you have for the future or investment rule has to be applied at the corporate-wide level?

So as a fund, as investment holding company and investees in the portfolio, not only entities in a consolidated organization, but also our portfolio companies, we want to have the same level of rule applied. We are still building processes and also, we are reviewing current issues. So next year, we want to fully start our annual review. So until then, we keep identifying issues and build processes. And we want to make sure that we have good operations and process in place best for us. So I believe that you are still working on issues to be identified. Thank you very much.

Thank you. Thank you very much. This concludes the SoftBank Group Corp. investors briefing. This meeting will be available on our website later. Thank you very much again. And thank you, Navneet, for your participation. [Statements in English on this transcript were spoken by an interpreter present on the live call.]