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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you very much for waiting, ladies and gentlemen. Now we would like to start the SoftBank Group Corp. Earnings results announcement for the 9-month period ended December 31, 2020. First of all, I would like to introduce today's participants. From left, we have Masayoshi Son, Chairman and CEO; [Foreign Language] Yoshimitsu Goto, Board Director and CFO; Kazuko Kimiwada, Corporate Officer, Senior Vice President and Head of Accounting Unit. Today's announcement is live broadcast over the Internet. Now I would like to invite Mr. Son, Chairman and CEO, to present you the earnings results and business overview. Mr. Son, please.
My name is Son from SoftBank Group. Thank you very much for joining today. So right now amongst the world, we are suffering from this very difficult stage with pandemic, and we haven't reached the peak yet actually that so many people are facing difficulties challenging. And also medical workers are working very hard worldwide. But last summer and also fall and also this fall, I believe that the situation will change quite dramatically. About the same time last year, it was just the beginning of pandemic. We didn't really know what COVID-19 is. But in March, in April, we start understanding that this can be -- this could be quite a big thing. SoftBank Group around March time frame last year, we thought that this was quite an emergency status, not only for the world, but also for the company so that we need to be defensive and protect from any attack. So that's why that we became a completely defensive mode and announced to raise JPY 4.5 trillion by monetizing our own assets so that we can have very strong defensive status, which was announced last March. And as a matter of fact, JPY 4.5 trillion monetization has already achieved. And actually, we overachieved. And many people told me that you sold too much of your assets. So some people concerned and worried that we sold too much and monetized too much. I mentioned and also used example of defensive mode at earnings results. This is to make sure and be a solid defense for any attack. But there are -- in between, there are many other attacks -- other measures are coming in so that not only to avoid any attack, but also from inside that we set a defensive mode so that we can actually attack not only defense. So offense and defense, it was something that I was thinking. But then -- and actually was working on this vision fund to operation. Vision Fund 1 -- at the latter half of Visual Fund 1, especially the IPO of Uber wasn't priced as we expected so that we had some difficulties there. And also there our rework situation that we have received many criticism. And also, we learned a lot of lessons. And -- but at the same time, I mentioned back then that we had learned a lesson, but I don't want to be too hesitating to walk out. And even that we are unpopular back then, but only with our own money that we started and launched Vision Fund 2 and not operate the business, but vision or strategy itself never changed, still stays the same. And something that I believe in has been also executed. And as a result, we were able to see and also announce quite a good numbers for you. So now that I would like to go into the details of our financial results. So for today's presentation, numbers, not only the numbers, financial numbers, but also, I want to remind you, once again, what is SoftBank? What is SoftBank Group? That's something probably is more important than the number itself. So that's why that I would like to start with this. About 6 years ago, at the same occasion of earnings results announcement, I said SoftBank Group is the goose as a good example. So we, as then a goose, which I would like to put even more color on this story. But before I go into that, let me quickly cover the numbers. So as you may have already seen, the consolidated financial reports that JPY 3 trillion we have achieved and exceed JPY 3 trillion for net income. This number is just accounting measurement. And it's good but doesn't really make too much sense, thus I've been talking about JPY 3 trillion, which is quite a good number here. But at the same time, I'm not that excited, but I'm not that sad either. So for me, we have -- as a business person, as an entrepreneur, this is not a satisfactory level yet. We have still room to grow. So in 40 years, we've -- I've been running the company actually that I am there, this is the only achievement that we have done. But even more important, the net income, NAV, net asset value, this is also something compared to that much, in 9 months that we were able to increase by JPY 1.2 trillion. This was also quite a big number. And as of today, JPY 22.9 trillion is -- now as of today, JPY 25-something trillion, so we have already grown by JPY 3 trillion. So net asset value to JPY 2 trillion, JPY 3 trillion can be moved up and down in 2, 3 months. So we cannot be too happy about this change. So compared to last March, about JPY 4 trillion increase. So net income has increased by JPY 3 trillion. So net asset value by JPY 3 trillion to JPY 4 trillion increase does make sense here. Alibaba and Ant has been a big concern from the market. And we have also experienced and seeing the share price down of Alibaba and I understand that many people have worried, but these it days has regained. And at the last week earnings, Alibaba also announced the 50% increase in net income. So the business itself is actually smoothly operating and growing steadily. That's how I understand. At the last number of the financial or numbers. So NAV is more important than net income, but actually, even more important is the loan-to-value, which is net debt or by equity value of holdings. How much percentage that we have of the net debt of equity value of holdings, and this is something that we calculate. And in normal times that we would like to manage this loan-to-value below 25%, that even at the abnormal case that we don't want to go exceed 35%. So we don't want to have 3x of net debt of equity value of holdings, even in abnormal case. As of December, it was 15%, which is quite healthy status that we've been able to manage. As of today, actually, we are even better in the numbers of loan-to-value. So maybe we are not aggressive enough from the sense, I would say. Those are the numbers with regards to earnings results, but I'll come back to Vision Fund later. Before I talk about our Vision Fund, let me talk about Arm transaction, which we announced earlier. Our plan is to sell Arm at around JPY 4 trillion. We bought Arm at around JPY 3.2 trillion. The share price back then was about JPY 100 per share. So bought at JPY 3.2 trillion and sell at JPY 4 trillion, which is pretty good. Even after selling NVIDIA, we would exchange 2/3 of equity with NVIDIA shares. We decided this transaction when NVIDIA share was about $488 per share. And currently, it's around $440 per share. Taking into account, we would sell Arm at around $45 billion or so. And we expect more from earn out perspective, for example. So what this deal is all about? Arm, as you know, most of CPU of smartphones around the world are Arm based. After selling Arm to NVIDIA, NVIDIA's CEO, Jensen has committed to providing Arm license as open platform. And NVIDIA's GPU and DPU will be combined with Arm power. So what will happen is in the days of AI, the most suitable chip set for AI will be made available. So by combining Arm and NVIDIA together, we will have the chip set most suitable for AI. Then what will happen is, for example, when it comes to drug discovery, cloud and robotics and climate changes, there are a lot of challenges or issues that we need to address. And AI should play a bidding role in issuing -- sorry, addressing those issues. So this transaction is not for money, but more important, we will make the most powerful computing company to contribute to the world and that too a human kind that's more important when it comes to Arm NVIDIA transaction. So coming back to the first question, what is SoftBank? Let me remind you, once again, SoftBank Group has SoftBank that operates telecom business in Japan, and SoftBank Group as a holding company and SoftBank as an investment company, whereas SoftBank KK is a telecom company and I have been keeping saying that for the last few years, and that's -- that remains true. But from general public's viewpoint, whether SoftBank Group is a traditional investment company or not. Well, we are a little bit different from an investment -- traditional investment company. In fact, SoftBank Group is a producer. SoftBank Group is an investment company. And SoftBank Group is a producer. What does that mean you may ask. What are you producing? We are producing golden eggs. We are goose that produces golden eggs. You may say that, what are you talking about? If SoftBank Group is a goose, this goose is specializing in information revolution, and this goose will produce a golden eggs. And those golden eggs are produced not by chance, but those golden eggs will be produced under certain plans. This goose has been producing a lot of companies like Yahoo! and Alibaba. And looking back, the history, well, you may say that SoftBank's core business is telecom business, and we are not happy that now you aren't saying you're an investment company. But in fact, it's only about 10 years ago when SoftBank started a telecom business. But looking back even further, 25 years ago, for example, SoftBank has been sort of practicing yielding golden eggs. When Internet started, we invested in lot of start-ups associated with Internet. For example, we had major shareholder of Yahoo! U.S. and Trend Micro and other companies. We have been investing or we are yielding golden eggs. So when we call golden eggs, those companies that exit at a value of over JPY 10 billion or exit. So every year, how many eggs we have been producing? For example, Renren, GungHo and Alibaba, which was 2014, Alibaba was listed in 2014. We started investing in Alibaba in 2000, and it took 14 years before Alibaba became a listed company. Of 14 years, 13 years Alibaba kept losing money. And from SoftBank's financial reports perspective, every year, people say that you should write-off Alibaba's value on your financial book. But in 2014, Alibaba IPO-ed. And since then, 6, 7 years later, Alibaba is now 1 of the top 10 companies around the world. Before Alibaba's IPO, for 10 years or so, SoftBank as an investment company was in stealth mode. In the meantime, we bought Japan Telecom. We bought Japan -- Vodafone Japan, and we started preparing for running a telecom business. We focused on building infrastructure for telecommunications, building network and discovering or developing customers and developing products. I spend a lot of time and effort doing that even before Alibaba's IPO. So for the 10 years or so, before Alibaba's IPO, we were in stealth mode. And 3, 4 years ago, in 2017, we launched Vision Fund. And SoftBank Group shifted focus dramatically from telecom business to investment business. While we continue expanding and building telecom business, but the telecom business was led by Ken Miyauchi then. And when Internet was born, well, before that, we were selling wholesaling PC software and distribution. But we realized that information -- Internet revolution will become reality, then I started my time and efforts in doing that. But then the Internet environment is not open completely. So that is why that we worked on that even harder since then. But our communication infrastructure has built. And after this, I believe that we need to steadily expand. So I believe that we are able to run the service on top of that without any problem. But AI revolution not only as a study for the universities or college, but actually, AI revolution is in reality and disrupt the existing industry, and we have to start then. And for the Internet AI revolution, we need to start laying golden eggs, and there that we have decided to launch SoftBank Vision Fund. Two companies have gone public and 4, 6. In this year, as of last week, February, 11 companies. And also some are also coming in the following months. So since the Vision Fund launch, number of golden eggs are actually increasing in accelerating mode. Just about a year ago, many mass medias are actually saying that we have -- we are only laying rotten eggs. SoftBank Vision Fund is functioning because we said we will transform as an investment company. We are reborn-ing of ourselves. But many people said that the Vision Fund can be the discount factor, but it's not adding value for the SoftBank Group, for shareholders of SoftBank Group. So many people criticized, but I was -- I never doubted. I've been believing in this transformation. And now that we are in a harvesting period. Here, after the launch of Vision Fund, in 2, 3 years, about 15 companies has IPO and some others, only from Vision Fund. So I'd like to put it into the numbers of the status of SoftBank Vision Fund. Vision Fund 1 has invested 92 companies. Vision Fund 2 has invested 39 companies. In total, 131 companies. Just about a few months ago, 2, 3 months ago, Vision Fund 2 was unpopular as not many people said that we cannot invite investors to Vision Fund 2. However, we are continuously running this fund with our own money. So JPY 4.5 trillion monetization program was also in purpose of being prepared for the money of Vision Fund 2 as well. So JPY 1.3 trillion for the gain and loss on investments and about JPY 90 billion was the analyst forecast for this course. And as a matter of fact we have exceeded analyst forecast. So in 9 months period, showing the past 4 years since the launch of SoftBank Vision Fund, up to 9 months period for this fiscal year, and all these year-on-year basis comparison, you can see we have negative JPY 929 billion to JPY 2,767 billion positive this quarter. In fourth quarter, we have spent about 1 month or so, so JPY 2.7 trillion as of December end, but we are seeing even further growth. So only from Vision Fund as of today, we've seen like JPY 3 trillion or so. So it is making a very steady growth in this fourth quarter as well. So when you look at this, you would say -- you wouldn't say that the Vision Fund is laying the rotten eggs only. So from the portfolio wise, these portfolio companies, investing JPY 1.5 trillion and the current gross return to Vision Fund 1 as you see, the JPY 3 trillion. And as of today, February, actually that we are further increased from this number. Fund 2, we have started seeing the gain. We just start -- launched Vision Fund 2, but has already seen the JPY 500 billion gain. This, again, is showing quite a good start. So maybe I should go by one by one. DoorDash investment was JPY 680 million (sic) [ $680 million ] and actually it's exceeding JPY 1 trillion. So we have already made this much of the gain. So it's like a investment cost of JPY 70 billion and the gain was JPY 1 trillion, which is not bad at all. Uber, after the IPO, price went down once. And our investment cost was JPY 793 billion and now they're showing JPY 1.17 trillion. So the cost investment in Uber, many people said it was failure, failed investment. SoftBank didn't have bad eyes to look at the good company rather paying expensive money to the bad company. However, as a matter of fact that you can see that we have already made something close to JPY 500 billion gain from Uber, not bad, again. Guardant Health, about 9x. As of today, probably, this is even better. Open Door 3.7x. Relay Therapeutics, this is the drug discovery, 3.9x. Slack 3x. Ping An Good Doctor 2.1x. Vir 3x actually as of today, it is something that 9 -- 6x or something like that, probably 10x. Genomics, as you can see, as it says, 10x. And 2 -- our 2 companies are negative. OneConnect is negative, so minus JPY 1 billion. So JPY 3 trillion gain and JPY 1 billion -- JPY 10 billion negative or loss. ZhongAn, this is also negative. But as of today, it's doing better. So only 2 portfolio companies that the price went down after the IPO. So those 2 are the loss. But even adding those 2 only about JPY 10 billion or so. So JPY 3 trillion gain, only JPY 10 billion loss. So the proportion wise, it's not bad at all, Vision Fund 2. It's just 1 year since we invested. So just about a year ago that we have started investing in this, Beike, and about JPY 140 billion, and the result was tremendous. And Seer also went public. AUTO1, about last week went public, 3.4x, about JPY 200 billion gain. So here that you can see the Vision Fund 1, on blue portion,is the listed securities portion, listed company's portion, and the gray portion is still eggs in mother goose. Majority of the eggs laid has already born as golden egg, just about 2 of those eggs are white, as it is. But the remaining actually, JPY 3 trillion golden shiny eggs are laid. And gray portion, which is fill in the mother goose tummy so that it's not yet -- we don't know whether that eggs are gold or eggs are white. But those blue portion are the golden eggs. And those that laid eggs that we tried to see the conservative view. Our conservative valuation is probably 80% to the value that many investors would expect. So that gray portion will become blue eventually. And from SoftBank Vision Fund 2 perspective, listed companies are like this, and we are better then we just started SoftBank Vision Fund 1. When we launched SoftBank Vision Fund 1, we started from scratch, like me and Rajiv and some key members. But now we have better organization and performance is pretty good. And listed companies from SoftBank Vision fund perspective, DoorDash, investment cost was JPY 70 billion. And currently, value is over JPY 1 trillion. So that orange portion, which is, DoorDash, contributes a lot. And Uber, until recently, we were looking at negative numbers, but now we are looking at positive numbers with Uber and other portfolio companies after IPO are pretty good as well. And the same goes true to SoftBank Vision Fund 2. Talking about SoftBank Vision Fund 2, we are having more and more companies in the pipeline. When I say pipeline, what I mean is, we view potential companies, and we have investment committee and decide to make an investment into a certain company after talks and valuation and et cetera, so we have not signed official agreement, but, well, I would say, we have not made an official investment yet into those companies in the pipeline, but we are about to have them in our goose and including pipeline, companies net pipeline, we are currently having about 40 companies in our portfolio. With COVID-19 -- in the past, I traveled overseas every 2 weeks. But with COVID-19, I don't travel at all. But our efficiency is better because from early morning to midnight, I can have Zoom meetings back to back. And by listening to their pitch, presentation, I ask them questions immediately and start negotiating with them immediately. And every day, over Zoom, we can have face-to-face, if you will, meetings with our investment teams globally. So I think we are looking at companies coming into pipeline faster than before. Let me pick up 5 companies. First, VIPThink. This is AI powered early childhood education. And compared to early education in Japan, this is totally different. Why? Because they are having a very small class size. And interestingly, founder of this company developed online gaming before. And he had a child, and he wanted to provide good education to the child. So after his work was over at night, he started developing program for education for his own child, and he started business on that. Because he came from online gaming, his education program is pretty fun that attracts a lot of children. So children have fun studying and parents can study with their kids. And sports -- it's like a sports festival, like parents cheer their children up, and those children are in very small class, like 4, 5 classmates. So they are good friends as well as competitors, and parents cheer them up to encourage them to study more, whether it's a review or after class. And AI camera is analyzing the sitting position of a child, for example, facial expression and voices and answer speed, so this AI is looking at those children so that you can customize homework to respective children. Home school teachers can't afford doing that and home school teachers can get only a payment from a parent, one household. So it's very inefficient from home teachers' perspective but also inefficient from students' perspective. And college students, for example, can get paid 4x, for example, than he just teach one child. So this company is growing rapidly. So early childhood education in Japan is far behind of EdTech technology in China. So I hope that education community in Japan should realize that. And talking about education, this is an Indian company. This is more for higher education than our early childhood indication. This company provides a program to high school students for university entrance exam or civil servants for some examinations, and most of them can learn for free. And active educators at the moment are around 50,000. And educators can get incentives or tip, for example, by students. So educators are motivated to provide better education to students. And also, this company is utilizing AI for monitoring and this shows active subscription. And more and more students are paid customers. This graph shows monthly growth, not annual growth. It's been only 2 years or so since the company started, but it's growing so rapidly. This is, again, platform. So once platform is built, they can get a lot of profit. Another great one, which is like a rise up in Japan. This is for your health care. So you exercise by yourself, and so on. But the difference is, big difference is the number of users, 210 million users. Every month, about 10 million customers adding, 10 million a month. And the founder is only about 30 years old or something. He started the business 25 years old and only 5 years, he expand his business. There are about 2,000 contents for exercise, tailor-made for each individual, and the weight, fat, height based on your own measurements, it is tailor made, and I want you to see the video. [Presentation]
So he wanted to actually lose weight, but it's really difficult to continue. So that is why that he starts competing with others, doing the exercise together with friends and that's all actually motivates him. So if this person is only by himself by herself, you'll never be able to continuously doing that. But when you have friends together, exchanging information, then that you'll be able to kind of continuously exercise. And now that they're using wrist bands and also bicycles, some charged devices, those are also sold as using their own brand. So using social networks that you can compete with each other or actually measure your ranking and so on. So actually, Apple, Mr. Tim Cook, came and see -- came to see this service. And many people are actually competing each other. Other members, how much and how far they ran, they can also see from this map. And actually, if they come to Japan for seeing and running, then that route can be also seen by the others. So the product, purchase, exercise-linked data, community, all are actually managed by AI and are personalized tailor made. So you better run a little bit more. For example, you better eat a little bit less. So those kind of things have -- is proposed and also tailor-made for you. So this is also rapidly growing. One another things, completely different subject, but Seer. This is the protein mix -- proteomics, drug discovery. So latest medical is DNA and also proteomic. It's the 2 big themes for the medical industry. And to analyze, it really takes time-consuming and also very expensive. But that's what they -- Seer, creating the nanoparticle and adding to that, so that it's going to be easier and more effective -- efficient, excuse me, to analyze. If sometime later in the future, you may be a cancer or you may be suffering from disease, this is something that you may be able to tell by analyzing your own DNA genomics. So what is your current or present health condition? For that, you need proteomics to analyze. So traditional analysis, detection of proteins, you need to spend a long time with very expensive, cost for the traditional screening. But actually Seer developed, invented the binding proteins with particular properties, so that makes more efficient to analyze proteome by avoiding the traditional complicated process like depletion, concentration, digestion, drying and so on. So actually, they're using these nanoparticles, and with the automation instrument, analysis became very efficient. How efficient? Actually 9x throughput and also 17x efficiency in time. So it's a very significant achievement. So the more than 1 million varieties of protein, it can be analyzed. And more than 275 nanoparticles. So this is a great, great company. One another company, which is even more great or greater, I would say. And you may say, is this really true? Or you maybe ask to us. But this is using AI for the genomic editing. So like I said, genomics is something to treat, to forecast your future risk, but for cancer that you need to cut cancer out, what you need to do some treatment. So that's the traditional, existing medical treatment or you need to take pills, take drugs. Those are the current medicine -- medicals, but this one is to edit the genomics itself. So there, you see sometimes the genomic defects. And when you copy, you may have error in copying. So those 2 issues are there, or so -- doesn't have a genomics itself or you have errors in copying those genomics. So those issues can be resolved by this, Tessera. So we can do the writing for those defects of genomic information. So those 4 type of combinations of letters can create this genomics. So for the -- this is something similar to the computer language. But actually, you have a combination for the genomics. But sometimes it's missed or its error-ed. Though on your left-hand side, writing to add the defected genomics. On your right, rewriting, this is the error copy, so you need to rewrite. How we do that? Please look at this video. So first, the full -- defects of genomics, the white portion, this is protein. So rotation actually taking in and you need to write. So this light pink portion is something added, inserted for -- of the genomic information. And also writings -- rewriting of those error or incorrect information, so again, protein. This light blue portion is taken by this protein and actually come to this original genomics and also this protein rewrite. So those pink portion, once that you unbind and actually rewrite here, and that rewrite one comes back and put into this genomic sequence again. You may wonder, is this really true? Is something durable? But actually the latest edge technology, the latest edge genomics medication is something that we can do by writing or rewriting. And mobile genomics elements that you have several billions. And out of those, that you can find some defects or some errors, and that needs to be treated so that we can develop effective gene therapy. It's completely different from traditional medical approach, like a doctor wearing a white gown and struggling with tubes. So it's completely different from traditional approach. These engineers in that company use AI technology to decipher something and rewrite. That's something that people cannot do because billions of genes, you have to detect defects and something is missing. And by using AI, you can do it much more quickly than people. So 130 companies that we have invested in, and I can't have enough time to talk each and every company. And every time I talk about those companies that made me very excited, but experts are looking at those companies and having deeper discussion with them before I make a final decision. And Marcelo is leading SoftBank LatAm Fund and invested in some companies. And Banco Inter, for example, grew by 2x in terms of value. So again, Vision Fund 1, 92 companies invested; 2, combined 131 companies; and combined with LatAm fund companies, we have about 146 companies. And we have produced golden eggs like this, and some golden eggs should come to Japan. We thought that we should bring Yahoo! America to Yahoo! Japan and SoftBank accepted Yahoo! in Japan, likewise, of 164 companies that Vision Fund and LatAm Fund invested, we want to bring some to Japan. For example, PayPay, 40 million users are registered in PayPay, those are active users. Well, of course, our active users are a little bit less than 40 million, registered user, but nonetheless. PayPay is by far #1 payment company in Japan. Well, PayPay was not developed by Yahoo! Japan. Yahoo! Japan worked together with PayPay. And PayPay was not necessarily developed by SoftBank. And SoftBank helped them in terms of sales. But original technology came from Paytm, which is Indian company, and Paytm is the company that Vision Fund invested in. And Alibaba, Alipay was the inspiration of Paytm. And Paytm technology and Paytm model has evolved into payment platform in Japan. So this is how SoftBank Group's synergy works. Of 164 companies or so, there should be 20, 30 companies that are suitable in Japan. So we believe that we're going to have a lot of unicorn companies, potential unicorns coming into Japan. And the biggest platform to produce those golden eggs is the beyond carrier strategy that has been led by Ken Miyauchi, and Ken Miyauchi will pass the baton to Junichi Miyakawa this new digital revolution of digital platform. That is platform, I believe, that SoftBank will continue to grow by working together as golden eggs or companies in our portfolio. Now conclusion. SoftBank Group is a goose, and we are a producer of the golden eggs. And I kept saying that we focused on information revolution. But with a Vision Fund, we will focus more on AI revolution, in fact, solely on AI evolution from SoftBank Vision Fund perspective. Sometimes, we made a mistake by get derailed from AI revolution. But in principle, we focus on AI revolution. And why do I say we are a producer? Well, we have a turbocharger strategy. In order to turn white egg into golden egg, we need to turbocharge them. Not just relying on their organic growth. We need to excite them and provide financial support by Vision Fund. SoftBank Group has some companies invested in and also SoftBank Vision Fund have about 160 companies invested in. And unlike traditional investment company, the total, about 200 companies, most of them we are a major shareholder. We are not passive shareholder, but more active shareholder, if you will, plus we specialize in AI revolution. So we should be able to produce synergies. Unlike our traditional investment company or investment fund, they are passive investors. They don't really engage in day-to-day operation. But in our case, we specialize in AI revolution. So we can stimulate each other, and it's easier for us to produce a synergy. So turbocharger strategy, big vision, big money and big synergy, that's what I call turbocharger strategy. Again, we have about 164 companies in a portfolio. And if we have 3 groups, SoftBank Vision Fund 1 and 2 and LatAm fund, and most of the eggs are -- excuse me, all of them are in goose. And from SoftBank Vision Fund 1, we have laid some golden eggs. And from LatAm Fund, we have more eggs. And from Vision Fund 2, we have more eggs. And we have laid those golden eggs from those white eggs that are contained in goose. And again, those golden eggs are laid, not by chance, but by plan. We have expert teams, experts in business model, experts in technology and experts in market competitors. And from an organization perspective, from manual labor to production wise, like T-type Ford, we have scale to run operations more smoothly. Investment side is relatively large and actually not on -- actually, only receives our own money, only with our own money that we can run Fund 2 and also going forward. And also, we can recycle the money from Vision Fund 1 and 2. So even that we will be able to make further investments. So goose can lay with the golden eggs rhythm, so the rhythm that probably I should share with you how we are doing this. Maybe you don't want to be too serious to look at this. So just a little bit of interesting. [Presentation]
So as you see, at least the golden eggs are dancing with music and as if they're laid with rhythm, analyze about responsibilities of each. And that pace or rhythm is also important from my understanding. So how that -- so don't miss the good eggs and also be strategic and also analytics. So if we do too much, it looks like I'm just hunting for money, so maybe I should stop talking about golden egg anymore, but a little bit more seriously here to conclude my presentation. So we've been seeing the evolution of technology. First, it was fire and then agriculture, more representative automobile, electricity and recently, the Internet. But actually, the biggest evolution we've been seeing is AI. That's how I see and how I look. AI actually is greatest advance created by human kind. So with this Internet revolution, what has been replaced in the industry? Only 2 things. Advertisement, only 1% of GDP and retail business, which is only 10% of GDP. Only 1% of GDP advertisement industry and 10% of retail business has been replaced by the Internet revolution. With that, the top 10 of market cap now is coming out of the world. So about 8 out of 10 of the top market cap companies are this Internet related. But this is only 1% or 10% of GDP, just the replacement of those traditional business. But actually, as you see the examples, are the -- there's medicines, education, transportation with the autonomous driving, like Level 3, Level 4, it's not a level that we are looking at. Right now, we are looking at Level 5. We see autonomous driving robot, it's going to be on the road, on the public load and start driving. So I would like to create the world without any traffic accident. I would like to create the world without any Alzheimer's, cancers that people have -- I want to create a world, which can avoid any suffers or the world that the people don't have to suffer, climate change, pandemic. So many challenges ahead of us. So many wishes, hopes and also efficiencies, those kind of things that I believe AI has the power to change those, so that for people in 21st century and the happiness for them that I would like to keep contributing and for that SoftBank Group. It's using example once again for the golden egg. We are not only looking for the money. You may see that way. And if you want to see that way, yes, okay, please, see that way. But me, actually, I've been seeing, it's not that golden egg, I see the result. Golden egg is the final objective. I don't want to be too excited with some gains from there. That's not where we are. We are only halfway there. We haven't really achieved what I want to achieve yet. So I would like to keep continuously working hard with this business. Thank you very much.
[Operator Instructions] So yes, we'd you like to take the gentleman in the middle with black shirt.
My name is Nakagawa from Toyo Keizai. I have 2 questions, please. One, last time, you mentioned a lot, but not this time, is the Northstar, those investments in public securities, so long-term management of money. I believe, but there are some profit and loss for derivatives and also the realized gain and loss. You said that you are practicing a test run, but what is the status? And my second question is about Vision Fund, Vision Fund 2. So compared to Vision Fund 1, I believe that you mentioned that you created a better structure compared to Vision Fund 1 -- or more efficient. But can you give us more color? And also, are you still expecting to have third-party investors for Vision Fund 2?
So regarding your first question about SB Northstar, which invest in public securities, we are still doing the testing phase or test operations. As of the end of December, for SoftBank Group, JPY 100 billion level of the negative. But as of today, we just started -- start February, but actually it's positive of about JPY 100 billion or so. So some hundreds billions of ups and down, depends on the share price of that day, so that it does have sometimes make some changes, but it's not a large gain, but it is not a large loss. So it was negative as of the end of December, but it's positive as of today. And for the future, the main cause is AI revolution that I would like to focus. Of course, the GAFA, those are the kind of top leading companies, but I would rather like to see more potentials in terms of growth ratio wise that those AI companies, that the Vision Fund focus is larger. And as we monetize JPY 4.5 trillion of our assets and the Vision Fund, of course, needs some time to invest. So in the middle of those times, that we would like to use public securities for management of money to some extent. But once we see more and more pipelines, of course, that I will prioritize the purpose of use of proceeds for the Vision Fund investment. For your second question, Vision Fund improvement from 1 to 2. As of today, up to here, I just mentioned like JPY 2 trillion, JPY 3 trillion gain that we've been seeing. But from me, there are many -- so many things still needs to be improved. So there are many lessons that I learned. And of course, there are many rooms to grow and it becomes even more specific, which needs to be improved, which needs to be fixed. And we just see that. So now that we are in the tactics how we improve that, how we change, how we fix that, so it's not that we coincidentally see those improvements. But actually, strategically, that we've been improving ourselves so that we can make sure to keep our good rhythm to lay the golden eggs from the goose continuously. So that kind of a structure is kind of what management should do or businesses should be running so that we create the domain experts by industry or by regions. For example, medical -- medicines, you do need a very deep understanding of such medicines. So this team, for example, do devote themselves into this industry. Fintech, that domains, it will be focused on certain members, dedicated members, so we do need to create a dedicated team, dedicated person to the business. Otherwise, you cannot analyze the company, you cannot understand the company. So us, because we have a scale economy here, and we have several hundreds of people, the fund managers and stuff are there for Vision Fund. Then we start the domain expert system. So a variety types of incentive systems, variety types of the operational system is now ready to create. I myself, being involved in creating such systems by myself, so that we can improve day by day. In the beginning of our business, Yahoo! BB, Vodafone Japan, when we acquired those companies, we already know that we learned that we need to change the structure itself. That was very busy job. I had to actually involve in the change of the structure or system or organization of the company, and now that I'm becoming very detailed in terms of the many types of structure, including incentives and so on. If that answers your question, then please go ahead to the next one.
Next person is the person in brown shirt.
[ Snakabe ] from Nikkei. Looking at the market, well, market is pretty much heated. But you mentioned that to lay golden eggs at good rhythm, when market tanks, for example, how are you going to perform? When market goes down, what kind of strategy do you have to address that situation?
Looking at the stock market, while interest rate goes up and share price goes down, and unemployment rate goes up, then share price goes up. Depending on government policies and depending on Central Bank's policies, share price might be affected. But investors, if you invest in those price changes, they are speculators. So that's one pattern. We are not caring about those short term changes, we want to provide capital to evolution. Industrial evolution is the thing that we want to contribute to. For example, if automobile industry was born, now I would invest in that industry; likewise, electricity. So we are at the starting point of industrial evolution. And into -- the Internet of bubble burst, and people suffered a huge loss, but it was not peak. You realize that if you look back that, because the stock price now is much bigger than the stock prices back then. And likewise, AI companies, for a short period of time, their share price may go up and may go down dramatically, but because it's just the beginning. The more important thing is AI revolution has just started. So short-term ups and downs are just opportunities. Even though share price go down or go up, it's not the peak, and goes down, you don't have to worry too much about that. And our rule is to make sure that we keep laying eggs, no matter what, no matter how the stock market changes in short term.
My name is [ Yinove ] from Asahi newspaper. So in the beginning, you mentioned about Alibaba. So value -- holdings value wise that it's more than half of your value, asset value. And Ant finance IPO has been postponed. In the Chinese policy change, this can be a key for the future operation. How do you see that? Other Chinese companies I believe that you have invested many of them as well, that's something that I would like to hear your opinion. And the second, my question is Jack Ma. So after October, Jack Ma hasn't made any appearance to the public. In the meantime, have you directly communicated with Jack? And if so, what kind of communication did you have with him?
Yes. Thank you for your questions. Alibaba, Ant, Tencent and other companies, right now, probably the first time, our discussions are held for those companies. But think about that, United States, European companies, Japan antitrust policy, antitrust is something already there. We have several rules, several regulations made. In financial business, there is a banking law, securities law, there are many rules and laws and restrictions are there. And within this framework, you operate, you run your business in a healthy manner. So sometimes you see some incidents or some accidents that you learn lesson from there.
China for Internet companies actually that they have free hand, they could do almost whatever they wanted. But these days, they're becoming to be more sensitive about antitrust, like U.S. or European companies. And also, when you -- some kind of a financial instrument, like the close deposit, you cannot lose everything at one time, that will cause many trouble to many people. So the financial regulation type of things is necessary to protect citizens, protect people that they're using those services. And I believe China is in the process of such right now. But I think that's healthy things to become even bigger, to grow further of your business. I believe those are necessary regulations, necessary rules, necessary law. So I think what they are discussing right now is something that's already been done in United States or European companies -- or countries and that's not exceeding what we've been seeing in our country or U.S. or European countries. So that I believe we will be able to keep seeing the good growth or even more positive for the future of such business of Internet in China. For your second question, my communication with him, he likes to draw, he is drawing many drawings, and he sent me many drawings of his and creation, and he sent me those to see those. And personally, I like to see the drawing as well. So about 30 minutes or so that before I got a bit, I draw some drawings and so on. I haven't shown him yet, but once I complete that I can show him that, too. So not always about the business direct discussion, but we're talking our hobbies or we just send regards and so on. So that kind of exchange has been done. Next person, please.
Deborah from Wall Street Journal. Talking about goose and laying eggs at good rhythm, what's your view on rhythm for this year? I mean, from listing perspective, I don't know how many companies per month will be listed. So your rhythm for this year is my first question. And second question, what's the most critical thing for you to do now? You mentioned that there is harvesting period and also investing by SoftBank Vision Fund 2. And there are a lot of other projects, for example, solar energy. There are a lot of things on your plate. But what do you think is the most urgent thing for you to do?
The first question, rhythm, 10 per year or 20 per year in terms of IPO, I want to have that kind of rhythm to less than 10 companies or 20 companies per year. So we are going into harvesting period from SoftBank Vision Fund 1 perspective. And even from SoftBank Vision Fund 2, we have started some sort of harvesting. Again, we have about 160 eggs in the goose. So we are not investing in early stage companies. Even though a venture capital, we invest in late-stage companies. So it's high -- more probable to be listed. And for traditional venture capital, sometimes they make a lot of mistakes. But sometimes when they hit gold, they can have 100x return, a big return or something. But in our case, we still should be able to get return because our invested money is rather big inside. So again, coming back to your question, annual rhythm, listing 10, 20 companies per year. And most critical thing for me to do now is to focus on AI. 10 years ago, when our great Tohoku earthquake was hit, we wanted to provide a solution. And that's the biggest reasons why we started solar power, renewable power business or project. But now, many more companies are working on that. So we have made a good achievement, and we are looking at profits. So currently, we are talking with some potential partners to which we will sell our renewable business, renewable energy business. All of them or part of them is still under discussion, but we would rather focus on AI revolution. So that's what I'm dedicated myself most in.
So I go to take the question from a lady and then go to take a question from Zoom's audience. So due to the time limitation that we are now taking this lady's discussion.
My name is Inagaki from Financial Times. U.K. and EU regulatory is now reviewing the NVIDIA acquisition of Arm and there are many competitors claiming of violation of antitrust and so on, but that can be blocked. What do you do if there is any block of transaction? And also about Alibaba. So financial restriction and regulations, you mentioned that it is important regulation for China to grow a healthy manner. But Jack Ma, he is such a conservative and careful person. Why do you think that he made quite criticized to Chinese government, if you think that way?
Yes, not only U.K. or EU, but in United States, also the same and also many other countries as well that each related regulatory are in the process of reviewing this acquisition. Of course, this is necessary to take place. And, of course, I believe in, we will be able to receive the final approval by the necessary regulatory. Of course, when it comes to this kind of big transaction acquisition, there are many pros and cons or many people say about in many ways. But I believe with this acquisition, I believe we'll be able to keep the basic policy of providing as many users as possible for their service. And also the business domain above and the NVIDIA's business domain is -- does not overlap at all -- almost at all, so that antitrust for the concentrations of the business will not be deepened due to this transaction. So with those 2 points, I believe that -- we believe that we'll be able to receive the final approval for this transaction. So I don't have any Plan B for that. And originally speaking, Arm is recording highest sales. Also start showing the steady growth so that originally speaking, that they have their own plan to go public once again in later years. But this time, because we reached upon the agreement with merger for NVIDIA and also believe in receiving final approval, so we focus on that transaction right now. As for Jack Ma, for your second question, I don't know the details, only from the newspapers, mass media, I understand what was going on there. So that, I hesitate to make any specific comment about that.
And last question from the floor before we're going to Zoom.
Hotta from Nikkei. About invested companies. You have about 160 companies invested in? And how many of them -- how much of that group will be golden eggs, if you think? In the past, you talked about unicorns that could jump over the cliff and some unicorns went under the cliff and fell off the cliff. So again, how many of the 160 white eggs will become golden eggs, if you think? And second question, WeWork and OYO, for example. There were some companies that would need churn around. So what's the progress of the churning around those business? And I wonder if or when those companies are ready for IPO?
IPO or exit, I think 30% of invested companies will be IPOs or exit. That's in the case of traditional venture capital. And like I said earlier, they invest in those companies at an early stage. But we invest in companies at late stage. So I think our probability is higher than 30%. So we will see how better -- how much better. But we should be able to get a few times a bigger return against invested capital, I'm confident about that. And the second question about WeWork and other businesses that need a churn around. And due to COVID-19, more people stayed home rather than go to work. In fact, people -- some people are not allowed to show up to offices. So in that sense, companies like WeWork is hard hit. But in the meantime, they are working on improving technologies and improving business efficiencies. So they are -- breakeven point is much better than before. And so as long as more and more people get vaccinated and more and more people go out and interact with others, then I think we should be able to get more return in WeWork business, for example. So WeWork's corporate value is now better than before. Well, it went down one time, but it's recovering. And there are a lot of proposal, like stack ideas are coming into WeWork. So WeWork has rebound from the rock bottom. That's my understanding about WeWork. So now we go to Zoom to see who can -- who wants to ask questions.
Yes. Now that we are taking questions from the Zoom. [Operator Instructions] And this will be the last person who can make -- why don't we take 2? So 1 question each. So we will take 2 more questions. So Mr. Owada from Nikkei BP. Please unmute yourself and start your question.
Can you hear me, okay?
Yes.
So golden egg. So production line for golden egg, how many people -- how many staff do you think is needed for this production line? So you mentioned 10 to 20 companies can be good candidates for golden egg. So in that case, what kind of people do you -- are you -- how many people do you need for this production line?
Yes. So real means of competition never ends. Actually, we keep improving, making efforts further. But this year, we have already seen 11 companies went public as golden eggs already. So 10, 20 per year means that we have already set a certain structure to keep this pace. And from here that we will keep working on the improvements for the system.
So why don't we go to next one. Two more. So the next is from Mr. Saito from Nikkan Kogyo.
So the question is the position of SoftBank KK in SoftBank Group. You mentioned that 20, 30 companies that SoftBank Vision Fund have invested, you want to bring them to Japan. So is that main rule of SoftBank KK, to have those business in -- prosper in Japan? So what kind of expectation do you have from SoftBank KK? And Mr. Miyakawa, who is going to be CEO in spring?
In SoftBank KK, most of my colleagues that I have been working with since the launch of my business are in the executive team. And Ken Miyauchi, I have been working with him since maybe 2 years after I launched my business. And Mr. Miyakawa, I have been working with him for 20 years or so. We are comrades, so rather than boss and subordinate. Maybe I'm a little bit bigger, I'm a big brother, than -- bigger brother, but we are rather comrades from my perspective. In fact, we exchange opinions often. And tomorrow, we're going to talk about PayPay, for example, and we'll continue working together, working on projects. And going forward, Mr. Miyakawa will be CEO, and I hope that he will continue working to make sure that SoftBank KK grows even further. And I want him to make sure that the network should evolve, 5G and 6G, and a lot of digital revolution and AI revolution, I want him to lead as a captain, new captain, and to support him executives like Mr. Shimba, Mr. Imai and Mr. Aono and Mr. Fujihara and Eric Gan. And those strong members will support Mr. Miyakawa to drive beyond carrier strategy.
So we have all questions from the Zoom. So anybody from the floor?
Yes, I can take the last 1 question from the floor then. So he will be the last person for question.
My name is Hyuga from Bloomberg. The February last year, I was also here for participating this revenue result. And I think situation has been changed dramatically. Last year, there was discussion on privatization, and I made a question to you regarding how you think about the privatization of the business. And you said that that's an option we have in the -- you have some time spent to seriously consider privatization in the past. But considering the pros and cons, accountability or the fair disclosures or the accountability for lenders and the transparencies that the resource factors that -- you said that you feel the advantage of being a listed company. Since then, the market also concerned -- mixed feelings regarding SoftBank Group, whether to go private or maintain public. In the last year, you said that you didn't make any specific comments about that. So after 12 months since then, and you didn't comment about that this time. And do you -- have you changed your mind regarding public -- both public and private companies of SoftBank Group? With -- as a captain of the big ship, can you give us an explanation how you lead the company?
So no comment from me. That's all from me. Thank you very much. And thank you very much for your time today.
So thank you very much. Once again, this concludes the SoftBank Group Corp. earnings results announcement for the 9-month period ended December 31, 2020. The video footage of this meeting will be distributed on demand from our corporate website. Thank you very much once again for joining the SoftBank Group Corp. earnings results announcement for the 9-month period ended December 31, 2020. [Statements in English on this transcript were spoken by an interpreter present on the live call.]