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

Good morning. We'd like to start the SoftBank Group Corporation's Investor Briefing. First of all, I'd like to introduce the participants from SoftBank. Mr. Goto, Board Director and CFO; Ms. Kimiwada, Corporate Officer, Senior Vice President and Head of Accounting; and Navneet Govil, Managing Partner and CFO of SoftBank Investment Adviser from U.S. The session starts with FY '21 Q3 external environment and SBG's initiative by Mr. Goto, then overview of our consolidated results by Ms. Kimiwada. Our financial update by Mr. Goto, followed by SoftBank Vision Fund update by Mr. Navneet Govil. You can choose either English Japanese or original line for this meeting. And we can take both English and Japanese questions within Zoom after the presentation. Materials for today are available at our corporate website. First of all, Mr. Goto will give you the FY '21 Q3 external environment and SBG's initiatives.

Yes. Thank you. This is Goto speaking, CFO of SoftBank Group. Thank you very much for joining from the early in the morning. So today, as usual, we will be having a presentation on accounting, finance and SoftBank Vision Funds. But before we go into that, I would like to give you a kind of a big picture view. So for the third quarter, in summary, we -- our strategy on business or finance they are under the very volatile situation. Actually, we believe that we've been able to execute the projects one by one in steady basis. When you look at the environmental -- external environment, things that we didn't expect, things we don't want to happen. There are many things for the external environment. And these things actually happened this quarter. As you all are aware, China related risks, which includes political risk, regional risk, those actually impacting the market. But in addition to China, there are many things happening here and there. Ukraine situation is one thing in the -- since 1989, in 30 years ago, after the building were collapsed, we believe the economical changes happens along with the political change. So I think that we've been seeing a similar type of cycle in every 30 years. And political and diplomatic challenge actually impacting to the market as well as the businesses. Under such circumstance, as we announced at the earnings results announcement the other day, we decided to terminate the agreement with NVIDIA. Of course, our original hope in which was to close this deal in successful manner, and however, looking at the regulatory environment, we have to accept the situation and we have to terminate. Not only that, Arm we have a strong belief in this company because it is going to be -- it has been a very essential company for the IT and software. And actually, its performance is doing very well in steady manner. For Arm, we've been holding this company 100%, including Vision Fund holding, which actually was a very good thing for us and this will become a very important and core company and business for the group. Not only the equity market volatility, we believe that the correction of tech stocks in U.S. is going to be some influence to many areas for our activities. Under such circumstance, we still need to be very calm and watch the changes, but at the same time, we've been investing in unicorns in continuous manner. From first to third quarter, we have invested in total 165 companies of JPY 36.3 billion. And at the same time, we've been keeping our financial discipline, including [ LTD ] threshold. And starting from this investment activity business, what we are trying to achieve is to make sure that we will have a good recovery of the investments, reallocation to new investments and return to the shareholders so that we would like to keep such good recycle and at the same time, to enhance our business or the enterprise value. At the same time, we hope that we will be able to improve our credit as well as our equity value. So that's the summary for these slides, and I would like to pass over to Kimiwada-san.

Thank you, Goto-san. My name is Kimiwada, Accounting Head. Thank you very much for your time today. Let me walk you through consolidated results from accounting perspective. Please turn the page to Page 2 in accounting section, as you can see in the third quarter period -- for the 9 months, net income was JPY 392 billion or down by 87%, [ JPY 2.6 trillion ] mainly due to loss on Investment Business. Mainly [ SB Opportunity's ] performance or poor performance contributed to this negative result. Details will be explained to you later by Navneet. Moving on to next page, Page 3, change in reportable segments. Since the first quarter, the Fund segment has been independent just to remind you. Next page, subsequent event, termination of agreement on sale of all shares in Arm, accounting treatment is shown here. This transaction was agreed with NVIDIA in September 2020. And in February 2022, the agreement was terminated. As of September 2020, we received $2 billion of cash. And $2 billion has 2 parts. First, $1.25 billion, which was a deposit received by SBGC. Of that, 24.99% is attributable to SVF1, and this deposit is nonrefundable. So recognized as profit in the FY '21 quarter 4. And the second portion, $0.75 billion received by Arm as consideration for a license agreement, which is effective and recognized as such in the period of this agreement. With regards to Arm, Arm has been and continues to be SBG's consolidated subsidiary, remains unchanged. On consolidated financial results. For Arm, since acquiring Arm in 2016, we have been considering impairment treatment and lately fair value of Arm is way over the cut. So from PL perspective, we don't expect any impact from Arm. Next page, Segment Income, investment business of holding companies. There are several pillars on this business. First, related to T-Mobile shares. And second, related to SB Northstar investment in the listed stocks. And another pillar is related to Alibaba shares. First, T-Mobile related highlights, which are shown in the red dotted line. Last year, we saw a big number due to sales of T-Mobile shares. But this term impact from sales of T-Mobile shares is limited. About our equity holding of T-Mobile, I will explain to you on the next slide. Going back to Northstar, the scale has been getting smaller and smaller, like we explained in the previous quarter. Likewise, in the third quarter, we continue to make it smaller. We still have gains or loss from the holding that SB Northstar still has, which is shown in the blue dotted line. And Alibaba, we have prepaid for the contract and gain from the contract was JPY 1.1 trillion, which was shown at the bottom of this chart. Alibaba's share prices have been weak, if you will. So from a derivative contract perspective, we are receiving gains. Next page, partial sale of T-Mobile shares. We already executed a partial sales of T-Mobile shares. And since end of September, what happened, until December end? Well, the number of shares held remain the same. JPY 60 million for T-Mobile and JPY 225 million for Deutsche Telekom. So in the quarter, we didn't sell actually, but we utilized them for financing activities. Next slide, T-Mobile shares again. Most of them are subject to call options held by Deutsche Telekom, and that is taken into account on this chart. And also, there is a T-Mobile share portion, not subject to call options. So all in all; as of December end, fair value was JPY 6.4 billion. And next slide. Now talking about the Deutsche Telekom's shares. Fair value as of end of December was JPY 4.1 billion. Next page, Page 9. Again, back to T-Mobile shares. When Sprint was sold, we acquired T-Mobile shares. And this is talking about fair values taken into account of contingent consideration, which means the companies have right to acquire 48.75 million T-Mobile shares for additional consideration if certain conditions are met. In principle, as the share price goes up, then the fair value should go up as well. For the term, third quarter, this share price went down. Accordingly, as you can see on the chart, our fair value went down. To remind you, conditions are 45-day trailing VWAP of T-Mobile share over $150 during April 1, 2022 through December 31, 2025, thus the condition has to be met. Next page, investment in limited stocks -- excuse me, listed stocks and other instruments, BS and PL. From a group's perspective, the numbers are very limited. And third quarter or impact on the third quarter from PL perspective is 24.7 negative and impact on net income attributed from the owner of the parent cumulative gain or loss since inception, minus 91.9. Next slide. As you know, Alibaba share price has been weak lately, which leads to a derivative gain for us over JPY 1 trillion. And impact on net income and BS are shown on the right-hand side of the chart. So net income, JPY 684 million in that quarter. Next slide, consolidated PL summary. I already touched upon key parts. So let me move on to next slide, Page 13. Consolidated BS summary, just let me pick up some points. The first related to SB Northstar, the asset went down significantly, as you can see. When it comes to investment, SVF investment is shown in so-called 2. And also, other than SV Fund, Vision Fund, we have investment securities over JPY 3.8 billion. And the next slide shows details of investment securities other than Vision Fund, those are the investment that we have made. Latin America, JPY 976 million; T-Mobile, JPY 802 million, Deutsche Telekom, JPY 479 million. And SoFi, JPY 173 million, Lemonade, JPY 58 million, those are some of the big investments. Next slide, BS from liabilities perspective, and -- I'm sure that Goto-san will touch upon these later in his section. Next slide, BS from equity perspective. Just let me draw your attention to one thing. Accumulated other comprehensive income, JPY 992 million positive due to weaker yen. Next slide, cash flow. I won't go into details on this slide. And next slide, SoftBank Vision Fund segment income. For this, I believe that Navneet will walk you through later. And Page 19, co-investment program to SVF2, which was announced in the second quarter, this is talking about related-party transaction. Again, this information is already disclosed. And going forward, since this is related-party transaction, which is very important from disclosure perspective, so we will continue disclosing this information accordingly. In the third quarter, though, we don't expect major changes or differences. And moving on to appendix slides, let me pick up some points on Page 21, talking about WeWork. As of end of 2021, fair value was JPY 3.9 billion held by our group. And the cumulative acquisition cost was JPY 10.9 billion. That was as of December end. And cumulative loss was around JPY 8 billion. And Page 22, talking about goodwill. We didn't get goodwill in this quarter per se. But due to exchange differences, ARM's goodwill saw changes were up by JPY 102 million. That's all from myself. Thank you very much for your attendance.

Thank you then. We would like to go to invite Mr. Goto for the financial update.

Yes. Thank you. Now that I would like to present our financial update. So this is the summary of first to third quarter of this fiscal year, fiscal '21. For the performance in net asset value. So we have investment loss recorded of JPY 551 billion. And while net income held up at JPY 392 billion, and the net asset value was JPY 19.3 trillion. Therefore, we believe that we have a very strong balance sheet continuously. As I mentioned for quite a long time, from the enterprise value in the safetyness point of view, we are not all feeding ups and down based on the P&L, but rather like to focus on the value of the net asset value. And the second is the investment activities. Like I mentioned in the very beginning of this meeting, we've been able to increase the new investments steadily and also collection or the recovery. At the same time, we've been diversified our portfolios. So from the portfolio management point of view, this is very positive news that we've been developing our diversification of portfolio. Investment itself, Vision Fund 1 and 2, mainly from Vision Fund 2, 32 -- excuse me, JPY 39.2 billion being invested, for Latin America, USD 3.4 billion. In the monetizations, [ order ] sales has been also ongoing. In total, JPY 22.2 billion has been either sold or monetized. And distribution from Vision Fund 1 and 2 in total, JPY 13.1 billion has been received by SBG. And that, we would like to use it the reinvestments. And as for the diversification of our portfolio, the concentration of Alibaba has been focused in the past few years. But as of this third quarter, this concentration on Alibaba has been reduced to 24% and mainly because of the Alibaba share price declines, and at the same time, we've been using for the financing purposes as well. At the same time, investments by Vision Fund has been increasing. So in total, JPY 39 billion investment has been done. And including LatAm, almost 300 companies became our portfolio. So they are also increasing our total number and actually enhance our diversification, not concentrating on one names. So they're also working for the diversification overall. And the financial activities -- the big agenda, of course, is the loan-to-value. As of the end of third quarter, 21.6% and cash position, JPY 2.1 trillion. Both are clearing our financial discipline that we've been communicating to you. It's been managed in a healthy manner. And for financing from January to December, again, continuously, we've been working on the asset-backed financing using our holdings and that being executed through the quarter. Redemption has also happened during this quarter. For example, the domestic subordinated bonds, JPY 361 billion has been redeemed. And that front has used in January of the domestic bonds. As for margin loan, and the decline of the share price, we like to kind of manage the risk of the volatility. We've been refinancing some terms for this loan and try to proceed the healthiness or the safetyness of our financing by amending terms and so on. And here on, explain about the investment activities by the group companies, on your left is the SoftBank Group. So this is using our own balance sheet. This hasn't been changed. All you know, Alibaba, Arm, Domestic Telecom, SoftBank KK and T-Mobile, Deutsche Telekom. And Arm which is now a private company, we are aiming to bring this company go public during fiscal year 2023. And with that, we're expecting that the liquidity of this [ asset ] is going to improve even further. On your right-hand side is the private equity part, Vision Fund 1. They have already finished the investment period and now total 83 companies. Vision Fund 2 on bottom -- middle, this is the main fund vehicle for us. Total 208 companies compared to Vision Fund 1, ticket size became relatively small. And [ allocate ] as diversified as possible. LatAm fund on your right bottom, total 84 companies' investment has been completed. So this is a reminder for our investment strategy. So we are not aiming for becoming so-called asset manager, but we would rather like to become vision capitalist for the information revolution. So to make this information happen, we become the investor to promote the revolution itself. So we would like to allocate our funds to the unicorns around the world through Vision Fund. And at the same time, by investing activity, we would like to encourage that this innovation disruption and realize our vision for the mid -- also focusing on the maximization of investment return from mid- to long-term period. Here shows gain and loss -- on your left-hand side is gain and loss on investments, JPY 551 billion loss this quarter. Mainly evaluation loss from Vision Fund is a reason. And on your right-hand side, this is net income, about JPY 392 billion. Mainly the difference is again relating to loss on control of Sprint and also the Alibaba related. And the equity value of holdings on your right bar chart JPY 24.7 trillion. And this is in net asset value, less net debt by the end of December, JPY 19.3 trillion. So compared to the previous quarter, slightly decrease in the NAV per share and share price, JPY 11,363. So comparing with our share price, we still see the discounts quite largely. So we would like to continuously make an effort to narrow this gap. And here is the portfolio status on your left. At the end of March 2020, as of that moment, concentration in Alibaba was about 48%. So almost half of our holdings were Alibaba. In others, Vision Fund 1 and Vision Fund 2, the ratio is only 11% in total of those Vision Fund 1 and 2. On your right-hand side, on the other hand, actually, Alibaba's ratio has decreased to 24%, even less than 25% and Vision Fund 1 and 2 and LatAm American fund. Those 3 funds in total, 45%. So investment through the fund is now taking the largest portion of our assets and because they are focusing on unicorns. So even though they are private equities, but not the startups. So the company's very much matured status. And we have about 300 companies invested through these fund vehicles. So we have about 300 very diversified in much -- the company with us as of today. And the liquidity of the asset point of view, Alibaba from there since, this has been making a good contribution. Till March 2020, we had 76% for the proportion of listed shares. And now that's been reduced to 57%. So the liquidity or I would say, listed shares proportion will change, along with the listing of those portfolio companies by Vision Fund. And also the relisting of Arm can be a good contribution to the proportion of listed shares going forward. And here shows the cumulative investment return for Vision Fund 1 and 2. For Vision Fund I, as investment period has ended, so that we are aggressively working on our exits, and you see the multiples. So the investment cost was $88.6 billion, and this became $137.9 billion, so very much close to JPY 1.5 trillion, including the recovery of those investments. So exited portion, if you look at that, 2.1x multiple has been achieved, which is very satisfying. And also we're still holding, but being already listed, especially these tech shares considering the sluggish situation of the tech shares in United States, but still we hold 1.4x multiple. And although this is -- it's unlisted, but still valuation wise still increasing pretty well. So that roughly speaking, each of those segments are increasing or improving. On your right-hand side, Vision Fund 2, this is still early to tell because we just started it recently, but us already achieving 2.4x for the exited portion. And listed and unlisted those will be something that we're expecting for the further growth in the future. Here shows the regional allocation of the investees, 34% are in the United States. In the green portion on your left, Asia, Europe, Latin America. China is about 18% right now. So actually, about 50% are coming from other than United States and China. So the China situation has been discussed. And as of today, we are still being conservative in terms of activities in China. So whenever there is any investment decisions, we try to be more selective in terms of investment in China. Visual Fund 1 and 2 comparison. And this is something that we used in the previous quarter. But based on our third quarter results, I wanted to show the lesson we learned. So actually, in business cost per company, a $0.9 billion per company being invested in Vision Fund 1. This is quite a large amount but when it comes to Vision Fund 2 it is about $0.2 billion per company, about JPY 20 billion to JPY 30 billion. So I think that we are still quite large tickets that we are spending per company compared to the other normal private equities, but I think that this is a quite comfortable level that we are investing here. [ JPY 87 billion ] has been invested in cumulative way on Vision Fund 1 and [ JPY 37 billion ] on Vision Fund 2. The Amount, we believe that this is going to increase, but the number of investees point of view, Vision Fund 1 was 94 cases and Vision Fund 2 is already 201 cases. So we actually managing to -- not to invest too much concentration under one name. Of course, if there is any shining star comes in, of course, our investment managers and our management, I would like to invest in large. However, that we do need to learn the lesson from here to make sure that not having too much concentration on one name. And here is the new and follow-on investments. And mainly from Vision Fund 2, [ Sun ] has made a follow-up investment -- follow-on investment in Vision Fund 1. And this is a new listing -- and this shows the kind of status towards IPO for those portfolio companies in Vision Fund 1 and 2. From first quarter to third quarter in total in Vision Fund 1, 11 companies went public. In Vision Fund 2 already 10 companies being public. And those companies have filed for IPO 3 in Vision Fund 1 and 5 in Vision Fund 2. So already being listed and are to be listed. In total, about 30 companies are there for Vision Fund 1 and 2. I believe that quite a good number of companies being successfully going public so far. There are many other companies that we are not yet able to disclose, but there are good pipelines ahead of us so that we are very much looking forward to be able to introduce you sometime soon of those companies. And recycling wise investments, new listing and sales and monetization. This is the kind of a one cycle that we are pursuing. And for Vision Fund 1, mainly then the sales and monetization so that at the -- towards the end of third quarter, [ JPY 16 billion ] has been, Vision Fund 2, [ JPY 6.2 billion ] has been monetized so far. So in total, [ JPY 22.2 billion ] has been monetized or sold. So that is a new fund for us and recycling to the Vision Fund. Especially Vision Fund 1, as I mentioned earlier, the ticket size per company is quite large. And these company, when they go public, how well can we monetize is the good challenge for us. So we would like to seek for the best scenario for monetization, which will be mostly important, but at the same time, very difficult challenge for the management of the fund compared to making new investments. So as much as possible, we would like to collect those investments, which will making good contribution to IRR. And at the same time, because we have a third-party [ ILPs ] for Vision Fund 1 so that we need a careful balance in terms of monetizing those assets when ready. And this is kind of a summary for this cycle for this quarter. On your left is the contribution so far. So not only the contribution to Vision Fund, but also adding a share buyback on the very bottom, this is one way of our investment activity as well for us. And the new investment to fund is this black portion. It's about JPY 4.2 trillion if you add -- JPY 4.1 trillion for Vision Fund 2. And if you add Vision Fund 1, that's going to be JPY 4.2 trillion. And also JPY 70 billion towards the end of December last year is the share buyback. In January, actually, we were very much aggressively bought back. And as we announced recently, JPY 86.3 billion has been bought back in 1 month. So actually, that we exceeded what we have done before for this program. And that, I will come back to this agenda in later slides. And compared to this investment total, what's the source of investment on your right-hand side. So distribution from Vision Fund 1 and 2, JPY 1.5 trillion and the return from SB Northstar, this vehicle is investing in public securities, JPY 483 billion. So in total, very much close to JPY 2 trillion has been secured as a source of investment. And on your right bottom, this includes asset-backed finance, which is the non-recourse SoftBank Group credit, mainly using Alibaba, which is JPY 805 billion. So in total, JPY 3 trillion, has been made by divestments, monetizement or [indiscernible] finance. So this doesn't really damage our credit itself and raise the money. Remaining is the increase of corporate bond financing. And so on that, along with the asset growth, we would like to keep monitoring loan to value. And within the safety zone that we would like to expand the size of such financing, if it allows. And I believe that without that we cannot really grow as a company so that while we're maintaining and monitoring our financial discipline, we would like to grow this kind of activities. And this is a commitment -- capital commitment Vision Fund 1 no change and Vision Fund 2, JPY 51 billion commitment -- capital commitment being made. Partially, coming from the co-investment program by management, which is [ 2.6 ] but others are coming from our balance sheet. The page here on Arm, I would like to present a little bit about Arm, which Masa has also explained at the earlier earnings announcement and press release. We agreed with NVIDIA to terminate the sale of Arm. And now that the Arm to aim for listing in fiscal year 2022. And this page shows the -- a clear picture of recovery in revenue and EBITDA. Revenue has grown to $2.5 billion. Because we cannot make a sudden increase in revenue, so in the meantime, we've been preparing for a good time, and that came to the result in this fiscal year. And at the same time -- so business model of Arm is something very exciting. That will take me an hour and on to explain about the business more. So excited about it so that I don't do that today, but we believe Arm is the very heart of the people's lifestyles or working style, and they are taking very good portion of the market share, and we are very much excited to see the future of the growth and wanted you to analyze by yourselves and I wanted to see the business model of Arm, too. And based on that growth, we believe that the enterprise value of this company can give us a good expectation on the -- at the time of the IPO. And Arm does not really have a consumer product so that it may difficult to imagine how they work or where they are. But when you drive a car, actually hundreds of Arm chip is installed in the car. And I believe and I bet you your mobile phone you're using, smartphone you're using does have Arm chip installed. And those will grow exponentially going forward and their presence is going to be very large in such market. And their balance sheet actually is very robust. And a very good in quality, stronger debt-free balance sheet. And based on their strength, they will be reborning as a new Arm on to the next stage or next chapter. From the SoftBank's point of view, Arm is not in full throttle yet so that we, the management is now having discussion with our management. And actually, we are having very much fun to discuss the future of this company. And with those, we would like to aim for or the most significant IPO in the history of the semiconductor industry. Of course, when it comes to the investment activities, Vision Fund will be the key role. And those portfolio of Vision Fund will increase from 300 to 500 and so on. So we would like to, at the same time, enhance the ecosystem of this Vision Fund. And -- we believe by having this Arm in this position, we may be able to create another ecosystem centering Arm going forward. So our equity value and debt value, those 2 big engines is going to build such a great future for us. And financial activities in third quarter 2021. For corporate bonds, 1 redemption, JPY 361 billion domestic subordinated bonds. And for other financing, we have, forward transaction, using Alibaba share, JPY 254 billion and margin loan, those will be rolled when the maturity comes. Of course, that change is based on the share price so that the size may reduce based on the share price decline and also repayment of the margin loan for T-Mobile shares and Deutsche Telekom shares for the current transactions. Loan to value, 25% is our threshold. And right now, we are positioned at 21.6%. And we are happy and comfortable with this level. We would like to continue maintaining a sufficient financial buffer. And I'd like to have an appropriate level of leverage so that we can pursue the good growth of the company and business. Cash position JPY 2.1 trillion and 2-year bond redemption is about JPY 1.3 trillion. So again, we cleared this threshold and having a sufficient cash position gives us the good and well scheduled issuance in always having [indiscernible] subscription, which is a very happy news for us. And I believe that the market adjust us in terms of this financial discipline. In the management of cash position, this is just one example. What happened to the interest coverage? Actually, we don't very much focus on this interest coverage as our business measurement because risk for the debt repayment is not only one, but also from the financial cash flow, like a role of the bonds redemptions, those are amounts which are much larger than those interest payments. So actually, that we're adding such to check our interest coverage. So for us to see our company, it's not really the appropriate measurement by calculating interest coverage. But if you add distributions on top of dividends, divided by interest expense is 6.4x. So at the beginning of the Vision Fund, even we discussed this that the people are doubtful about good and steady distribution from visual fund, which I can understand. But now that we are coming to a fourth and fifth year for Vision Fund that we keep receiving a robust distribution from Vision Fund. So that can be -- I believe we became a good time to add this distribution for the calculation of interest coverage now. So this is our unique measurement. But I believe that for our company this is appropriate to include distribution for calculation interest coverage for our case. And this shows the board reduction schedule. Fiscal '21, last year, April, I mentioned that we have JPY 1.2 trillion redemption scheduled back then. So the amount was quite large. But if you see the ads of -- with the January both corporate positions of JPY 550 billion. All the redemption amount has been covered. And actually, we raised more than that as a matter of fact. And steadiness and safetyness of roles of such financial things has been a good contribution for this scheduling. And here as I mentioned earlier, we have issued the domestic retail subordinated bonds, JPY 550 billion in amount, which we received quite a large demand, and we had very good sales. And this amount can be the largest or the record high ever since -- and exceeding our record as a matter of fact, of JPY 500 billion back in 2019. So retail market in Japan, I think, should be well utilized, not only us, but many companies should be able to become the company that the retail investor can choose. That's the kind of economy that we would like to see in Japan. And the interest rate 2.48%. This is quite reasonable for retail investors. Some people say that the interest rate is a bit high. But actually, what we are aiming considering our IRR that we are targeting, this interest rate is more than acceptable amounts that we will be able to pay. And on your right-hand side, we completed refinancing of domestic subordinated bonds, as you see. And here, interest bearing debt, excluding nonrecourse financing, and it's almost flat. Cash position. So keeping our financial discipline, and we have decreased progress on -- a cash position decrease due to the progress on the investments and the repayment of debt, but still JPY 2.6 trillion cash position is more than enough. So I think that if you look at the financial fixed book, probably that we need to slim down, that can be the textbook could say to you, but actually, probably for our case, we need to be more severe and tougher in terms of the healthiness and solidness of our balance sheet. So we would like to keep on doing such a cash position maintenance. Net interest-bearing debt, debt less cash position, JPY 5.3 trillion. So compared to previous core term, slight increase but not a big impact. And here shows the adjustment for asset-backed finance. Largely, there are 2 types of instruments. One is using derivative color forward or per transactions, that's the orange. In very simple collateral -- share collateral financing, which is margin loan in the blue portion. So there are 2 types of the instruments. Difference if the share price decline, what happened, and also if share price increase what happen, that can be the difference of those 2 types, especially when share prices go down, orange color for transaction will be able -- we have an option to choose to settle by share price -- share, excuse me. But the margin loan, if the share price goes down, if the share price below the certain threshold, we need to repay. And then we amend the term and refinance. So those are the main difference in between those 2 types. And the margin loan is a collateral loan so that the upside is very much ours. So considering the growth future of the holdings, probably margin loan is better. But here, I think that we need to have the best mix of those 2 types of instruments. In Orange portion, hedging effect on your right bar, dotted box is the asset-backed finance color and forward, 4.9 trillion transaction has been made in the JPY 3.1 trillion equivalent to the share is make us available to do this financing. So as a result, like Alibaba, whenever share price goes down, we still have several options to choose. And here on is financial strategy. No changes from the previous quarter. So I would just reposting the same slides. I'm not going to repeat myself, here -- on page financial policy, financial discipline. This is the most important slide. We manage our loan to value below 25% in normal times and maintain funds covering bond redemptions for at least 2 years and secure recurring distribution and dividend income from Vision Fund 1 and 2 and other subsidiaries. So those 3 that we would like to keep monitoring. And since the WeWork, we've been make sure or this keeping financial policy or portfolio company finances to be self-financing, no risky package. And here again, and that -- this stage is share buyback JPY 1 trillion buyback program we announced last year. This is for 1 year. So until November this year, we have this program ongoing. So why are we maintaining our financial discipline and at the same time, do not miss any investment opportunities. At the same time, have a well balanced to proceed this buyback. And of course, we are eager to achieve this JPY 1 trillion for the buyback. However, having said that, priority-wise, most highest priority is the financial discipline, the #1. That's something that we need to keep. And so far, from November to January, last year to this year, January, about JPY 157 billion being bought and about JPY 80 billion has been bought only in January this year. So that looking at the circumstance environment, sometimes when we need to hit against, we will do that while we're maintaining our financial disciplines so that we'll be able to achieve this JPY 1 trillion buyback.

Last but not the least, ESG. In the third quarter, we saw some progress on some focused areas. First, ESG group-wide policy. We want to complete development of the policy and the fiscal year end, and Dr. Matsuo of the Tokyo University has heavily involved in this discussion. And disclosure in line with TCFD, we plan to get it disclosed by late June this year. This is not an easy task to do, but we are working on that and human-like risk. We are planning a human rights due-diligence in SBG, and we want to implement it in FY 2021. And COVID-19, we developed COVID-19 Testing Vehicles and we are preparing for the third shot across the nation and also from external evaluation prospective, we were elected as year book member, top 15% of companies from each industry. And the next slide shows investment environment and the social areas. As an investment company, what can we do to help them through Vision Fund, through our investments, we want to help contributing to ESG and our philosophy of the investment, which is to focus on AI-related businesses and also our Arm should help sustainability. So even to continue planning what we can do from financing perspective -- finance perspective to contribute to ESG. We also have SB Opportunity Fund already invested in 47 businesses. And we strongly support underrepresented founders to help diversify the tech sector. That's all from myself. I passed upon some Vision Fund performance in my presentation, but we're going to ask Navneet to go through in detail.

Last but not least, we would like to invite Mr. Navneet Govil, CFO of SoftBank Investment Adviser to give you an update on SoftBank Vision Fund.

Hello, everyone. Thanks for joining us. Before we get started, please read the SBIA legal disclaimers on Slides 2 and 3, or refer to the online presentation for more details. For more information on the Vision Funds, 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 December quarter. In the in-focus section, I'm going to provide an overview of the evolving role of Capital Markets and the growing number of listed portfolio companies in the Vision Funds. I'll explain how our portfolio companies progress and mature towards public offerings, and I'll show how listings are creating a positive flywheel effect. This effect is multifaceted, benefiting the companies themselves, SoftBank and our limited partners. Let's begin with a summary of our progress along with some highlights from the last quarter. Slide 6 shows a performance snapshot for Vision Funds 1 and 2. As you can see, total committed capital stands at $149.6 billion. Our total acquisition costs are now $129.6 billion, cumulative investment gains are $56.9 billion. Total fair value now stands at $186.5 billion, and we have made a total of $44.2 billion in distributions to our limited partners, $7 billion of which has been from Vision Fund 2. Slide 7 demonstrates that consistent with the founding principles of the Vision Funds, we continue to deploy capital in high-quality technology companies participating in the AI Revolution. We're investing with conviction and confidence. To summarize activity in Vision Fund 2, we have now deployed a total of $42.4 billion. Cumulative investment gains of $5.6 billion bring the total fair value in the fund to $48 billion. Next, we'll dive a little deeper into the makeup of this growing portfolio. Here on Slide 8, you'll see an overview of the Vision Fund 2 portfolio. We've now made a total of 209 investments. We've exited 1 company, 195 companies in the Fund are private, and they are now 13 publicly traded companies in the fund. I've spoken before about our approach to portfolio construction with Vision Fund 2. Our investment team has worked hard to build a thoughtfully constructed portfolio. Investments in Vision Fund 2 are highly diversified across 9 broad sectors. Here, you can see the breakdowns by industry as well as our acquisition costs split by geography. We continue to use our global platform and deep regional knowledge as an advantage when we invest. I'll briefly touch on some recent milestones from the most recent quarter. In Vision Fund 1, we saw 7 portfolio companies go public, while in Vision Fund 2, 5 portfolio companies listed. As a reflection of our global reach, we were pleased to see listings take place across all major markets in the U.S., EMEA and Asia. Last quarter, portfolio companies from both Vision Funds reached a significant milestone of a public offering. IonQ went public via SPAC representing the world's first publicly traded quantum computing business. Advanced warehouse automation experts, AutoStore, went public in Norway's largest listing in over 20 years. In India, PolicyBazaar and PayTm, innovators in InsurTech and FinTech went public and are among India's largest-ever technology listings. Grab, a super app delivering FinTech, transportation and e-commerce services achieved a major U.S. listing, raising $4.5 billion to fund future growth. And there are more including Roivant Sciences, Exscientia, WeWork, Aurora, PEAR Therapeutics and SenseTime. These companies are pushing forward technologies that will change the way we live and work in, in the years to come through drug discovery, digital therapeutics, robotics, quantum computing and autonomous vehicles. Let's move on to Slide 11. Each new listing provides new capital and resources to portfolio companies as they invest to fund further growth. But it also enables us as investors to unlock value from our investments. For the portfolio companies that went public in the December quarter, our total acquisition costs were $16.6 billion. At quarter end, fair value stood at $22.4 billion, representing a gross gain of $5.8 billion. 7 Vision Fund 1 companies raised a total of $10.4 billion. 5 Vision Fund 2 companies raised a total of $3.8 billion. As the portfolio mix shifts from largely private toward public companies, we benefit from valuation uplifts, portfolio financing optionality and, if appropriate, unlocking value through exits. Let me go deeper into that point and illustrate the current mix of public, private and exited investments across both vision funds. In Vision Fund 2, current fair value is $48 billion, of which exits and public companies are 27% at $13 billion and $35 billion is held in private investments. In Vision Fund 1, current fair value is $138.5 billion, of which exits and public companies are 59% at $81.7 billion and $56.8 billion is held in private investments. While we're still early in the Fund 2 journey, we're witnessing an accelerated rate of Fund 2 listings substantially earlier than for Fund I. I'll elaborate on this later. While I have mentioned a series of listings in the quarter, we have also seen strong momentum in private fundraising across the portfolio. 10 portfolio companies raised additional capital to drive continued growth, raising a total of $3.2 billion. Through this process, the collective valuation of these companies increased by over $22 billion. This fundraising activity gives a strong conviction that our portfolio is built around high-quality names with strong fundamentals. Let's move on to Slide 14. In 2021, we launched 3 SPAC investment vehicles to provide flexible pathways to public markets for innovative technology companies. In December, we announced that SBF Investment Corp. 3 announced a definitive merger agreement with their target Symbotic. Symbotic is an AI-enabled supply chain platform led by its exceptional founder, Rick Cohen. Rick has decades of experience scaling and operating logistics businesses, having run C&S Holdings and C&S Wholesale Grocers, the largest grocery supply company in the U.S. Symbotic is transforming warehouses across the U.S. and Canada, applying a mix of cutting-edge autonomous robots with AI-driven software to dramatically increase warehouse throughput and efficiency. The company has exceptional visibility of forward-looking revenues. Customers already include retail giants, Walmart and Albertsons. On completion of the merger, Symbotic will be valued at $4.8 billion, having raised $725 million in fresh capital to fund continued expansion. SoftBank is committing 200 million of that capital through Vision Fund 2. We expect the combined company will begin trading in the first half of this year. Before we dive into the in-focus section, I'll summarize the financial impact of Vision Fund 1 and 2 performance on SoftBank. Beginning with Vision Fund 1 from inception to December 31, Fund net profit was $34.4 billion, of which SoftBank's share was $17.6 billion. SoftBank's income from management and performance fees was $8.9 billion. The total contribution to SoftBank net of third-party interest was $26.5 billion. Continuing our focus on Vision Fund 1. Here on Slide 17, I show the impact of fund performance on SoftBank. Total paid in capital is $27.6 billion. Total value to SoftBank is $53.3 billion, of which net asset value is $37.8 billion, distributions are $7.4 billion and accrued and paid performance fees are $8.1 billion. Moving on to Vision Fund 2. Slide 18 shows equivalent data points showing the impact of fund performance on SoftBank. Total paid in capital is $44.3 billion, total value to SoftBank is $49.5 billion, of which net asset value is $41.4 billion, distributions are $7 billion and accrued performance fees are $1.1 billion. In this quarter's in-focus section, I'm going walk through how we support portfolio companies as they prepare for a critical milestone and IPO and explain why portfolio company IPOs matter to us as investors. We're talking today following a period of volatility in public markets. It's always best to step back and look at the long-term picture. We created the Vision Funds as long-term investment vehicles insulated from short-term volatility. An IPO is more than a liquidity event. It's a signal of maturity that unlocks a series of meaningful benefits for growth stage companies. But the important moment at IPO isn't the listing, it's the work done beforehand. Today's in-focus section will show how we support portfolio companies pre-listing and explain the benefits of life as a public company. Most importantly, I'll show that for the vision funds, access to the capital markets represent a flywheel for progress. They provide capital flexibility via long-term liquidity and eventually enable us to recycle our capital into the next generation of winning companies. I began this section by explaining that we like to focus on the long term. Here on Slide 20, you can see the distribution of public offerings going as far back as the late '90s technology boom. You see noticeable dips during the early 2000s and winding, the post 2008 financial crisis and the 2020 COVID-19 pandemic. But regardless of short-term slowdowns, capital markets are always receptive to listings from the right businesses. For the Vision Funds, IPOs are indicators of progress, a sign that we have successfully supported a portfolio company through growth to maturity. Each company has to decide when the time is right for them. Our role is to guide them through the process, ensure they are well capitalized, have strong business fundamentals and have an established track record of executing on their goals. Here on Slide 21, you can see every listing that has taken place for Vision Fund portfolio companies. Since the inception of the first Vision Fund, we've seen 36 portfolio companies go public. This is a useful visual indicator of our maturing portfolio, with a number of listings each year accelerating from 1 in 2017 to 23 in 2021. We believe that the continued progress of our portfolio companies toward public markets reflects more than just liquidity for us as investors. It is a strong signal that our portfolio companies have robust fundamentals and are public market ready today. Moving on, I'll briefly explore the value that has been unlocked across our public portfolio. Based on an initial acquisition cost of $53.4 billion across the 2 Vision Funds, our total fair value now stands at $87 billion, representing an uplift of $33.6 billion. For SoftBank and our investors, we believe this is a sign of strong performance through a period of volatility and change. We anticipate that as our portfolio develops, we will continue to benefit from value creation. Here on Slide 23, I'd like to give an indication of more recent activity for 1 quarter end. As of December 31, 9 more companies from Vision Funds 1 and 2 have filed to go public. The further 3 companies have announced combinations via SPAC mergers that will see them enter public markets. We maintain a robust pipeline of upcoming listings with approximately $50 billion of investments across an exciting roster of late-stage pre-IPO companies. We work to find the highest quality companies and founders, provide them with the capital and expertise they need to navigate growth and stay invested for the long term. Five years after the inception of the first Vision Fund, we believe that these numbers represent the value creation flywheel in action. We invest capital thoughtfully, add value to our portfolio companies and grow our invested capital, so it can be recycled in the next generation of innovative businesses. The value proposition of the Vision Funds has always been about more than providing capital. We work hard to provide local insight with global reach, connect companies to an unparalleled ecosystem and offer thoughtful advice and support. As companies approach a listing, we advise on listing mechanics, IPO readiness, governance essentials, key hires and critical business operations. We also open our networks to connect them to leading financial institutions and other capital market specialists. So why do we invest so much in supporting portfolio companies ahead of a listing? Despite being long-term investors and IPO is a critical moment in the life of any of our portfolio companies. There is a symbiotic relationship between what's needed ahead of a successful IPO, and what will deliver long-term shareholder value. These essential ingredients include: broader access to capital; future growth and trajectory; strong corporate governance; transparency and financial reporting; reputation and brand recognition and operating and financial discipline. We're investing in high-quality businesses led by strong teams, but the work to prepare for the scrutiny of a listing is challenging, and we're proud to be able to share what we've learned when each portfolio company as they go through the process. SoftBank portfolio companies have now raised a total of $64 billion in public offerings. Since 2017, $597 billion has been raised by companies going public on U.S. capital markets. Of that amount, just over 10% was raised by SoftBank portfolio companies. As I've said before, a listing isn't merely an exit event or a liquidity event. It's an opportunity for a company to raise additional capital to accelerate growth and further disrupt the market they are targeting. Here on the right of the slide, we show that SoftBank portfolio companies raised substantial sums at IPO from a number of high-quality investors. We're proud to be invested in the likes of Uber, Coupang, Grab, [ DD ] and DoorDash alongside them and pleased that their IPO proceeds can drive continued revenue growth. High-quality companies benefit from flexible and efficient capital. A public company can raise capital at IPO, but also through follow-on offerings utilizing equity and debt. This mix of efficient financing options can provide winning companies with the capital they need to accelerate business growth, attract new talent, expand into new markets or carry out strategic acquisitions. Here are 2 examples from across our portfolio. Being public enabled Guardant Health to utilize a convertible senior note raising $1 billion to fund future acquisitions and R&D. And being public enabled DoorDash to fund the acquisition of Wolt, a complementary platform business operating in 23 European markets. For many companies, an IPO is a moment of scrutiny and transparency. The most successful companies invest early in governance, building strong functions to hold management accountable, manage risk and ensure positive social impact. This work ensures that shareholder and management interests are fully aligned. Strong governance improves shareholder confidence, enhances risk management, protects shareholder interest, mitigates conflict of interest and drives better management decision-making. Strong governance requires leadership and culture, but there are many important signals and indicators that demonstrate intent and build trust with shareholders, including: a diverse, independent and experienced Board, independent audit compensation and governance committees and diverse and experienced leadership. There's a strong link between long-term performance and these indicators of strong governance. At Uber, many years of hard work improving governance is reflected in huge progress in its corporate culture, improve trust and leadership and a highly empowered Board with 10 independent directors. Moving on to Slide 29. I'd like to spotlight another area where we provide essential advice to portfolio companies as they prepare to go public. Operational and financial discipline. We use the deep knowledge we've drawn from investing in hundreds of companies to seek out and share best practice. Our portfolio companies are typically thriving growth-stage businesses but we help them build on the fundamentals and optimize their operations. We help them to review and improve business models, streamline financial processes, implement appropriate business systems, hire seasoned financial staff and introduce stronger internal controls. By investing time and energy in these fundamentals, companies can benefit from better decision-making, driven by data. They can mitigate risk, better forecast future financial performance and navigate regulatory changes. Taken together, these processes and skills can optimize business performance and shareholder returns. As you've heard, we provide our portfolio companies with direct support as they prepare to go public. We also invest time and energy in creating community where portfolio companies can learn from each other. With more than 300 portfolio companies, our ecosystem covers every sector and geography. Founders and executive teams access this deep pool of knowledge at every critical moment in their journey. In November, we welcomed portfolio company CFOs and finance teams to FinConnect in California. Participants shared perceptions and guidance on company building, IPO readiness and navigating life after listing. 5 years on from the inception of the first Vision Fund, we believe we continue to make strong progress. As we build and invest for the long term, we remain confident that our investment platform is helping us to select transformative companies support their growth and enable founders to scale towards public markets. With each successful listing, our flywheel of progress keeps turning, enabling us to realize returns and continue funding bold innovators in building tomorrow's winning companies. Thank you.

[Operator Instructions] First [ Sodo-san ] from Citigroup Securities.

I have 2 questions first, to Navneet. And like Goto-san mentioned earlier, financial markets are very unstable. But for the long term, to expand SBG's shareholder value. Anything you have made changes in terms of investment strategy? And anything that you stick to no matter what environment changes. So if you could give us a highlight on that, please.

Yes. We are building a very diversified portfolio of companies that we're investing in. In Fund 2, we already have 209 portfolio companies. our ticket sizes are smaller than in Fund 1, and we are very diversified across different sectors and geographies.

Second on valuation. There are a lot of media coverages here and there. But to put simply compared to NVIDIA, who consider the synergies, maybe it's difficult for you to deliver valuation beyond NVIDIA's valuation. And also market has changed since the announcement. So maybe I should ask Goto-san what's your current view, thank you very much, with regards to Arm's valuation?

Valuation differs by methodologies and purposes. So maybe we can't speak broadly. But we would like to keep applying conservative methodology for a valuation like we have been keeping -- doing. And for the future IPO, it's not appropriate for us to make a comment on valuation for future IPO.

So we are taking next question from Kikuchi-san SMBC Nikko Securities.

I have 2 questions, both goes to Goto-san. First of all, LatAm Fund. SBG has sold Sprint and in the meantime, you have shares in T-Mobile and Deutsche Telekom and SBKK has sold down and the Arm is going to go public and exit. And I believe that the companies are slimming down to Vision Fund itself. Then -- but the question is LatAm Fund, I thought that because Marcelo Claure is there, so that's why that you are running the LatAm fund. That's different organization from SBIA. So from the governance point of view or management point of view, I believe that the LatAm fund is a bit irregular. Are you willing to continue this business LatAm fund because reporting line looks different in terms of organization. Are you going to terminate, or are you going to transfer to SBIA? Are we having a big question about how should we deal in this LatAm Fund going forward? That's my first question.

Yes. Goto speaking. We don't have any idea stopping LatAm fund operational meeting because Vision Fund has been covering around the world, that's in principle. But for the LatAm region or Latin America region, LatAm fund has been playing a key role for the investment in Latin America, so that we can cover all over the world. So what LatAm fund has been doing and their track record and the future business will continue. At the same time, as leader, Marcelo has resigned, therefore, we understand your question so that we need to make sure that we have a transparent governance structure including LatAm Fund and trying to achieve the most optimized way. And that is something that we are going to have a further discussion internally.

Right, my going -- next question is about the shareholder return or return to shareholders. So buyback. We believe that the buyback is important. When you have ready with the plan and strategy in the -- I thought that this time, buyback could wait until your announcement on Arm. But in January, actually, you bought back more than November, December last year. While you've seen the LTV increasing, is it only because share price was declining in -- during the January. Why did you hit the gas in January for buyback? And the second -- another question is that you are receiving distribution from Vision Fund, and that's going to be the main -- I am assuming that will be the main stream for your revenue going forward. Then -- do you have any idea to distribute to the shareholders the distribution from Vision Fund, so that you are receiving distribution from the Vision Fund, and then you recycle those. But why don't you allocate those distributions to shareholders. That's 1 kind of idea I had because right now, only Masa is getting a return based on his investment in Vision Fund 2. Why don't you create the same type of vehicle for SBG investors so that they can join and enjoy the distribution from the Vision Fund because right now, only Masa taking risk and taking return, but such a high volatility share of SoftBank Group, and we are taking risk already. So we -- I think that the people are feeling unfairness here. If it's not that, then the company receiving distribution featuring fund is keeping the public company is a bit questionable for me so that the thing considered a privatization or allocating such distribution to shareholders is one idea I have been thinking. Do you have any comments or idea on that?

Yes. I think there are 2 questions in your second question. Regarding the buyback, especially in January, we had quite a large size that we bought back. And the reason for that was because, not only one reason as a matter of fact, but the main factor was that discount was even wider at that moment. And considering that discount status, we thought that we should be making action. So that's the main factor. When you see the share price declining, simply put, that's the kind of a moment we rather like to buy back. But that's not a simple math, actually that we do need to check our loan to value. We need to check the balance with the new investment activities because while we're keeping our financial discipline of loan-to-value but we own to do the buyback, we want to do the new investment, then we cannot keep our disciplines anymore. So that if we like to hit the gas on buyback, then we need to slow down the new investment activities for example. So that kind of balancing in many areas is necessary whenever we decide on the buyback progress. And for your second question regarding distribution of Vision Fund 2 allocating to shareholder of SBG. I understand that's one idea for the group management company, return to the shareholders of holding company, or some opinions that maybe we should spin off the vehicle so that the shareholders can access to those distribution too. And your question is about the existence of the co-investment program. That's another argument, I understand. And right now, Masa himself is the only 1 who is, as a member for this co-investment program. And what he needs to do is to play as a key role for -- as a fund manager of the Vision Fund, indeed this Vision Fund vehicle. And to enhance the performance of this leadership, we created this co-investment program, which is also beneficial for the shareholders of SoftBank Group in a sense. So that's why we resolved at the Board of directors meeting. So to make our best return to shareholders, we created this co-investment program. And that -- we believe it does make sense. And based on their understanding, we created this group structure. I understand there are many ways of thinking about the group structure. Ours may not be the correct one, but that's how we feel, and we think, and we explore.

Next question Hoshi-san from Nomura Securities.

Hoshi from Nomura Securities. I have a question to Goto-san, please. On Page 23 of your presentation, LTV. And I believe that LTV can be heavily impacted by the equity market. So in your view, again, LTV trend is going up, but still below 25%. So you still have a room to go. Is that your view? Or do you need to have a discussion how to control it and even make it lower than 21%. So what's your view on this trend?

As you pointed out, current 21.6%, we don't see any problem with this level. Looking at this chart, though, it looks like it's getting closer and closer to 25%. And at this run rate, it may exceed 25%. Some people may be worried about that, but I disagree. We -- our job is to make sure that this line doesn't go up 25%. We have a lot of things that we can do to control. If unexpectedly, very significant event happens on the stock market, LTV might be even heavily impacted, but 25% level, when you talk about loan-to-value 25% is very safe level in the first place. So getting closer to 25% doesn't necessarily mean it's risky or dangerous because 25% as a safe bar, if you will, in the first place. And on top of that, we make sure that we won't go -- exceed 25%, that's a discipline we have in our policy.

Going to next question from english line, Oliver Matthew.

My first question for Goto-san. It seems you have very positive reception for SoftBank bonds in Japan. Globally, some suggesting global funding rates may increase. What do you expect for the Japan market? And the second question for Navneet. Could you tell us how we should think about the timing to IPO for the Vision Fund 2, maybe comparing to Vision Fund 1, just as a general way of planning?

Yes. For your first question, I would like to answer. So the issuance, not only the domestic bond, but we also raised an issue in the global bond in dollars and euro. We always monitor the market and also always discussing internally. As of today, we don't have any immediate plan for the issuance, but we keep monitoring the market in investors' demand, and at the same time, we need to check our redemption schedule so that we can explore the best timing for the next issuance. So global issuance is something that we will keep considering, and we would like to keep accessing as well as the domestic market.

And Oliver, with respect to your question on IPO timing, we generally invest in companies that we believe will list in 2 to 5 years, but we're seeing a very interesting trend with our Fund 2 companies. It's -- we've already had 13 listings to date. And if you look at the overall portfolio, 27% of the portfolio is public or exited after 2 years compared to Fund 1, where we have 59% of the portfolio that is public or exited after 5 years.

Next question, David Gibson.

It's David Gibson from MST. Goto-san, can you clarify, so SoftBank sold its interest in PayPay to the Vision Fund for $1.46 billion. It implies about a value of about $5 billion to PayPay. Two things. Can you clarify, was that valued less than when the preference shares were done for PayPay in June last year? And secondly, what are your expectations or not for PayPay actually to IPO in the next year or so?

With regards to PayPay's valuation, at a certain point -- at a given point, we value a company based upon third-party evaluation. Of course, there are different views on valuation of a company, but we have certain rules in place to be able to give you a fair value from our perspective. With regards to listing opportunities, yes, that's 1 option, but timing, we haven't done any decision yet.

[Operator Instructions] Nakagawa-san -- this is Masuno from Nomura Securities. Sorry I missed state the name.

So I have 2 questions. One, loan-to-value. So every quarter numbers, we check 21.6% as of December. So this is already the past figure. And how are you surviving this quarter because last page of the presentation, share price as of February 7 of the P&L had shown on the very last slide in the $13 billion decrease. As of February 7, if no other environmental change happens, 22% or 23% will be the loan-to-value we can expect, however, not the end of December. But as of today, just after you spend in January and February in share price, what is the current loan-to-value? And based on that, how are you going to manage the speed of investment or the return to shareholders. Can you give us a color on the current status of loan-to-value?

Yes, loan-to-value actually, as the Masa said, he check 4 times a day, is it really the right thing to do, that's another question, but actually he does check those loan-to-value figure 4 times a day. Of course, share price changes that impact, but that be difficult to talk about loan-to-value in daily basis, while that we see the decline of share price of ours or share price of Alibaba, of course, that's going to be negatively impacting to our loan-to-value. And if you pick up Alibaba share, actually, their volatility is really high. So we cannot be too happy or too sad about the movements of such share price. So that is why we show the quarterly base of the figures so that you can check the past, and we do have several data with us every day basis to manage. And based on that situation, we changed the medicines or change the number of pills we take so that we don't want to use too strong treatment or sometimes we may need to have good care so that we need several pills in together. So if the movement is within our expectation, then I believe that we can manage our loan-to-value for 25% range. So the detailed management of those I'm hesitate to make any specific comments about those in Alibaba. With our holding of 25%. The movement can be something you can expect. And of course, when there is any movements dramatically, we have a measure or preparation to make an action to it.

My second question is to Navneet. December quarter, segment-based pretax gain that I'm looking at in the listed securities price down. So we do that for December. So we thought it's going to be lost, but actually, it was a profit in pretax. So Vision Fund 1 private companies evaluation is increasing. I believe that is the reason. And also the recent round push the valuation which offset with the decrease of listed securities. So my question is for the fourth quarter, January to March, while you spend in January and February, those -- these securities invested portfolios are decreasing, which is a negative effect to you. And -- but also, you have IPO filed company -- announced companies increasing. So private companies markup trend, is it going to increase or will you be able to continuously keep this trend of markup or the private company from January to March? That's my question.

We obviously monitor the markets very closely, and we'll see where the markets are, and accordingly, we will be able to determine whether we'll take an uplift or a markdown. But what's more important is that we invest in companies that have strong fundamentals. And even though there is market volatility, we're able to essentially look through short-term market cycles. That's why we are fund life is anywhere between 12 to 15 years for the 2 funds. And our focus is on investing in companies with the strongest fundamentals and prospects.

Thank you. [Operator Instructions] Thank you very much. This concludes the SoftBank Group Investor briefing for the third quarter 2021. Thank you very much again for joining us today. This session will be available on our corporate website later. Thank you again. [Statements in English on this transcript were spoken by an interpreter present on the live call.]