: Late-stage technology investor SoftBank Investment Advisers has made more than $5. 5 billion in exits from its Indian portfolio since it began operations in November 2018 in Mumbai, said Sumer Juneja, the firm’s managing partner. Of the total, about $1.
5 billion was booked in the last 12-18 months, said Juneja, also the firm’s head for Europe, Middle East and Africa. Another $1. 5 billion is liquid and in tradable equities, he said in an interview.
“Our portfolio is now maturing, so exits will happen. Our view is that every year, we should have one, if not two exits,” said Juneja. “Most investments we’ve made since the India office opened five years ago has had up-rounds from some marquee investors,” he added.
An up-round is when a new set of investors come in to invest at a higher valuation. In recent months, SoftBank made partial exits in private such as Lenskart and FirstCry and booked profits from listed startups such as , , Delhivery and PolicyBazaar. It continues to hold stakes in these firms.
SoftBank’s biggest exit so far was from Flipkart in 2018, when the firm sold its 20% stake in the Indian e-commerce marketplace to Walmart for about $4 billion. SoftBank subsequently made a return investment in Flipkart in 2021, as part of a larger $3 billion funding round. Overall, the Japanese investment giant has invested around $15 billion in India since 2011.
It has put in around $11 billion through its vision funds since 2017. “Our thesis in India is that we will invest in companies at $1-2 billion valuation and exit at the $5-6 billion valuation mark,” said Juneja. As additional companies from its portfolio go public, SoftBank, run by Masayoshi Son, is likely to make more exits in India.
Companies such as FirstCry, Lenskart, OfBusiness, Swiggy, Icertis and Ola Electric from its portfolio are potential candidates for public listings, Juneja said, adding that the timings of the public issues are hard to predict given the volatile markets and impending in 2024. SoftBank has been investing in India out of its Vision Fund I launched in 2017 and Vision Fund II launched in 2019. The total assets under management of both funds exceed $154 billion, as of May 2023.
The firm turned into a “defensive mode” in May 2022, after the tech markets collapsed and the vision funds incurred losses. On 8 August, the vision funds clocked a $1 billion investment gain after six straight quarters of losses. Meanwhile, earlier in July, SoftBank founder Son told investors and analysts it was shifting to an “offensive mode” and was keen to lead the artificial intelligence (AI) revolution.
SoftBank Investment, which hasn’t made any new investment in the last 15-16 months in the country, has been building a robust pipeline in AI-first and tech-first companies, including in India, said Juneja. He attributed the recent investment drought to good companies deferring fundraising plans and a broken pipeline in early-stage investing. “Most of the good companies, including our portfolio companies were well-capitalized and do not require capital immediately, even till the next three years.
Secondly, we had already passed on some companies in 2021, likely for issues with product market fit, or unit economics, or the quality of tech team or the quality of management. We are unlikely to fund these companies in 2023,” he said. Juneja noted that early-stage venture firms, which feed into late-stage investment firms such as SoftBank, have focussed more on portfolio management over the last 12 months, which has resulted in a lag in the investment pipeline.
This is likely to change going forward, he indicated, as it scans the for tech-first and AI-first firms. “Masayoshi Son has been talking about AI since 2017. But the use of AI has become more sophisticated.
If it is not a very high tech team and product team, which has the ability to use AI, then we will not invest in them,” said Juneja. He added that the firm spends an inordinate amount of time on companies to assess if they have the right tech team, product team and the DNA to build an AI-first business. “I think AI has become more accessible, more democratized and the use of AI will rapidly increase.
. . ,” said Juneja, noting that all of the firm’s portfolio companies have always incorporated some element of AI in their processes.