Flipkart sale, Oyo valuation gain help SoftBank post higher Q2 profit

SoftBank Group Corp’s profit for the quarter through September jumped 78%, helped by gains from the sale of its stake in Indian online retailer Flipkart and higher valuation of hotel rooms aggregator Oyo.

The Japanese conglomerate said on Monday operating profit for the July-September period climbed to 705.7 billion yen ($6.2 billion) from 395.6 billion yen a year earlier.

SoftBank Vision Fund, the $93 billion private equity fund that bets on tech companies worldwide, realised a gain of 146.7 billion yen ($1.3 billion) on the sale of Flipkart shares during the second quarter. The fund also recorded a valuation gain of 257.6 billion yen on its investments, SoftBank said in a statement.

For the six-month period, the company’s operating profit jumped 62% to 1.42 trillion yen thanks to Flipkart sale and a valuation gain of 503.8 billion yen on its investments in companies including NVIDIA and Oyo.

SoftBank didn’t give a break-up of the valuation gain from Oyo. However, it said that it had transferred the Oyo stake to the Vision Fund during the second quarter. The company had first invested in Oyo in July 2015 for $100 million and transferred the stake to the Vision Fund for $200 million as the Indian company’s valuation increased.

In September, SoftBank had led a $1-billion investment round in Oyo at a valuation of around $5 billion. This represented a big jump from the $850 million at which OYO was reportedly valued when it received $250 million from SoftBank in September 2017.

Separately, SoftBank sold its stake in Flipkart earlier this year to Walmart Inc., which acquired a majority holding in the Indian e-commerce company.

SoftBank CEO Masayoshi Son had previously said its $2.5 billion investment in Flipkart had grown to $4 billion.

On Monday, SoftBank said it paid 64.9 billion yen in capital gains tax on the Flipkart sale in India. “The sale of Flipkart shares occurred within 24 months of making the investment and therefore was taxed at 43.68%, the Indian short-term capital gains tax rate,” it said.