Frankly Speaking: SoftBank Vision Fund accelerating hi-tech investment, globally and in Saudi Arabia, says CEO

Short Url
Updated 13 June 2021

Frankly Speaking: SoftBank Vision Fund accelerating hi-tech investment, globally and in Saudi Arabia, says CEO

Frankly Speaking: SoftBank Vision Fund accelerating hi-tech investment, globally and in Saudi Arabia, says CEO
  • Rajeev Misra made the remarks on Frankly Speaking, a series of video conversations with leading decision-makers
  • Speaking of Saudi Arabia, he said “It’s a 30 million population, it’s young, it’s growing. You have dynamic leadership”

DUBAI: More multibillion-dollar Vision Funds that will invest in high-technology startups around the world, including in Saudi Arabia, are being planned over the coming years.

Rajeev Misra, the chief executive of the business that currently oversees $130 billion of high-tech global investment, told Arab News that further funds are planned once the cash from Vision Fund 2 is fully invested. “There will be many Vision Funds over the next many decades,” he said.

Interviewed on Frankly Speaking, the series of video conversations with global decision-makers, Misra also revealed plans for the fund’s first investment in a Saudi company, its strategy to bring jobs and company start-ups to the Kingdom, and his desire to entice big Middle East investors back into the funds.

“We exist because of them. The Vision Fund is a joint effort by our two major partners — the Kingdom of Saudi Arabia and Mubadala of the UAE — and whenever they decide to join in the next one, we’ll be ecstatic,” he said.

Saudi Arabia’s Public Investment Fund was the biggest backer of the first Vision Fund, with a stake of $45 billion out of a total of roughly $100 billion, but both it and Mubadala declined to join Vision Fund 2, which launched with a $30 billion investment wallet backed by SoftBank of Japan.




Rajeev Misra

Once Vision Fund 2 is fully invested — roughly $20 billion has so far been spent — Misra and his team will look to other funds. “There will be Vision Fund 3, there will be Vision Fund 4. The important thing is to create an infrastructure of 450 employees in 11 offices who can continue the work for the next 10 or 12 or 20 years,” he said.

Misra’s confidence has been boosted by the big contribution he made to the profits of SoftBank of Japan recently. Legendary investor Masayoshi Son, founder and chief executive of the financial giant, reported the biggest ever profit by a Japanese company, $46 billion, with the bulk of that coming from Vision Fund gains.

Misra acknowledged that Vision Fund has benefited from the strong financial markets of the pandemic crisis, when governments intervened with big stimulus packages and technology stocks boomed because of new working and travel patterns.

 

“COVID-19 last year validated our vision and accelerated it dramatically. It would have happened anyway; it just accelerated (things) by a few years. The pandemic catalyzed the adoption of digital services. The markets helped. The buoyancy of the markets is important, but the companies have to do well. A bad investment even in a good market does not make you money,” Misra said.

The Vision Funds enjoyed a string of successful initial public offerings (IPOs), notably the multibillion-dollar profit it made on the public offering of South Korean e-commerce group Coupang in New York.

“We had several IPOs that had huge profits in the past five months. Coupang is an exciting outcome and it is an amazing story because we stuck with Coupang even when they were not doing well,” Misra said.

The investments by the PIF and Mubadala in 2018 were motivated partly by the desire for financial returns in the fast-growing technology sector, but also by the need to create jobs and attract corporate start-ups in the Middle East from Vision Fund portfolio companies.

Misra told Arab News that he was “on the cusp” of the fund’s first investment in a Saudi company — a messaging company — but he declined to give details until the company itself made the announcement. A deal could be announced in the course of the next week, he added.

“I believe we have created thousands of jobs from our portfolio companies in the region, whether it’s in construction, whether it’s in hospitality or technology. And we work very closely not just with the PIF but also with the Ministry of Investment in doing so. We are a four-year-old fund, so this will continue over the next many years,” he said.

 

Misra is a trustee of the King Abdullah University of Science and Technology (KAUST). “It is one of the top science universities in the world. There’s amazing talent in Saudi Arabia,” he said.

“There are limitless opportunities to invest across all sectors. It’s a 30 million population, it’s young, it’s growing. You have dynamic leadership. Riyadh has ambitious plans to become the business hub of the region.

“The recent announcement to attract the regional headquarters involved huge incentives that support relocation. I mean Riyadh was recently recognized in the top 15 most entrepreneurial cities. Globally I think it’s attracting tremendous foreign investments, including as I said from the Vision Fund, with our first investment in a local company.”

Misra was adamant that the fund’s basic strategy — of investing in early stage high-technology companies — was the right one, and dismissed any suggestion of a crash in the valuations of the technology sector.

“The technology revolution is just accelerating. Not just with your regular industries like e-commerce or food delivery, but it’s accelerating within life sciences. In major industries, what are the two biggest industries that impact our GDP? Healthcare and education,” he said.

“Over the next five years, hundreds of billions of dollars in value will be created in customized health care, in reducing the cost of health care, and in personalized medicine.

“Also in democratizing online education, where education is accessible and will fuel quality education online. You will have online high schools and colleges providing Ivy League education globally. We believe AI will transform every industry in the world.”

“Technology is going nowhere. Technology is like what the human DNA is to your daily existence — it is intertwined with you. Either you adopt it or the business goes bust.”

The Vision Fund suffered some high-profile governance issues in the past, notably the demise of the IPO of WeWork in 2019 and subsequent revelations about conflicts of interest involving the founders of the office-space company. Some critics said that they detected a “Wild West culture” at Vision Fund portfolio companies.

Misra disagreed with that label. “In Fund 1 we have 85 portfolio companies. In Fund 2 we have 70 or 80 companies. We take minority stakes in those companies. We don’t run those companies. We sit on the boards. We do keep an eye on them but we don’t day-to-day run those companies.

“But we did make some mistakes and we learnt from it. Since then, we have undergone a major turnaround and now we make sure there are no conflicts of interest with the founder.”




Frank Kane

On the current craze for special purpose acquisition companies (SPACs), which some have called “blank check” companies, he said that there were benefits from accelerating the progress toward a stock market listing, but pointed out that no Vision Fund portfolio companies had used the fund’s own SPAC to go public.

“The most important message here is for a company, once you go public, you have to be ready and you have to be prepared to go public. You have to understand that you have to get up every quarter and explain to the analysts and the shareholders how you have performed,” he said.

Misra was keen to pay tribute to Son, the SoftBank founder who is often described as a “visionary” in the world of high-tech investment. He recalled how Son invested billions in a small mobile phone operator in Japan in 2006, just before the smartphone was launched.

“He said, ‘Rajeev, you don’t understand. Computing is going to move to the hand from the desktop. People are not going to be working off their desktop anymore. They’re going to use phones to compute, and I see that over the next 10 years and I’m willing to take that bet.’

“This shows you the nature of his vision — he saw 10 years forward and was willing to take a $20 billion investment in a highly competitive market when the market cap of SoftBank was $9 billion.”

Misra added: “That was 15 years ago, and it all came true.”

_____________________

Twitter: @frankanedubai


Oil prices rise over 1 percent as fresh virus curbs threaten demand recovery


Oil prices rise over 1 percent as fresh virus curbs threaten demand recovery

Updated 06 August 2021

Oil prices rise over 1 percent as fresh virus curbs threaten demand recovery


Oil prices rise over 1 percent as fresh virus curbs threaten demand recovery


LONDON: Oil prices rose about 1 percent on Thursday on increasing Middle East tensions, but fresh movement restrictions imposed by countries to counter a surge in COVID-19 cases threatened the demand recovery.

Brent crude oil futures rose 78 cents, or 1.1 percent, to $71.16 a barrel, after earlier dipping below $70 for the first time since July 21.

US West Texas Intermediate (WTI) crude futures traded 80 cents, or 1.2 percent, higher at $68.95 a barrel.

The growing regional tensions come as nuclear talks between Iran and Western powers that would ease sanctions on Tehran’s oil exports appear to have stalled.

“With tensions brewing among Iran and world powers over last week’s drone attack, it seems nuclear deal talks will be lengthy and unlikely to provide imminent sanction relief for Iran,” said Edward Moya, senior analyst at OANDA.

Offsetting the geopolitical tensions, concerns over the recovery of global oil demand grew amid a surge in coronavirus cases.

Both benchmarks fell for a third day in a row to a two-week low on Wednesday, partly due to the spread of the coronavirus delta variant.

Japan is poised to expand emergency restrictions to more prefectures while China, the world’s second-largest oil consumer, has imposed curbs in some cities and canceled flights, threatening fuel demand.

“China is now facing its most challenging COVID-19 crisis since the initial outbreak was brought under control,” analysts at consultancy FGE said in a note on Thursday.

In the US, the world’s biggest oil consumer, COVID-19 cases hit a six-month high with more than 100,000 infections reported on Wednesday, according to a Reuters tally.

Analysts at investment bank UBS, however, said they expect oil prices to resume their upward trend despite pandemic concerns, projecting Brent crude will trade between $75 and $80 per barrel in the second half of 2021.


Saudi Ports Authority records 
growth in activities in first half of 2021

Saudi Ports Authority records 
growth in activities in first half of 2021
Updated 06 August 2021

Saudi Ports Authority records 
growth in activities in first half of 2021

Saudi Ports Authority records 
growth in activities in first half of 2021

RIYADH: The Saudi Ports Authority (Mawani) announced on Thursday that all areas of its activities had seen growth during the first half of 2021.

The announcement reflects the Kingdom’s economic recovery from the COVID-19 pandemic.

In terms of containers, Mawani handled 3.6 million TEU (a measure of volume equivalent to a 20-foot cargo container) during the first half of the year — a jump of 5.18 percent year-on-year. Transshipment containers increased by 24.49 percent to 1.4 million TEU, while it handled a total of 138 million tons of cargo.

The number of passengers grew by 0.61 percent year-on-year to 288,000, and Mawani handled 429,000 imported cars.

BACKGROUND

In July, Saudi Ports Authority announced investment opportunities in partnership with the private sector to develop and operate multipurpose terminals in eight of the nation’s ports.

The authority also recorded an increase in the number of ships received at the Kingdom’s ports, which received 6,037 vessels — an increase of 6.6 percent over the same period last year.

Mawani launched four shipping lines in 2020 to help increase Saudi ports’ connectivity with their international counterparts.

In July, the authority announced investment opportunities in partnership with the private sector to develop and operate multipurpose terminals in eight of the nation’s ports, in line with the objectives of Saudi Vision 2030, which include making the Kingdom a leading global logistics platform and connecting hub.

The build-operate-transfer (BOT) contracts on offer are for terminals in Jeddah Islamic Port, King Abdulaziz Port in Dammam, Ras Al-Khair Port, Jizan Port, Yanbu Commercial Port, King Fahad Industrial Port in Jubail, King Fahad Industrial Port in Yanbu, and Jubail Commercial Port.

One of the goals of Saudi Vision 2030 is for transport and logistics to contribute 10 percent of the country’s GDP by that date, up from its current 6 percent, following the implementation of the Kingdom’s new strategy for the sector.

 


Pent-up travel demand helps Lufthansa halve losses


Pent-up travel demand helps Lufthansa halve losses

Updated 05 August 2021

Pent-up travel demand helps Lufthansa halve losses


Pent-up travel demand helps Lufthansa halve losses


FRANKFURT: German airline Lufthansa said on Thursday it halved its losses in the second quarter compared to a year ago, as travel restrictions eased over the coronavirus pandemic and passengers returned.

Europe’s largest airline group said its net loss between April and June came in at €756 million ($890 million) compared with 1.5 billion euros last year, when travel worldwide was halted by COVID-19.

Increased bookings saw the company record a positive cash flow in the second quarter for the first time since the start of the health crisis.

“We have been able to stop the outflow of funds in the current phase of reviving our business and generate a positive cash flow for the first time since the beginning of the pandemic,” said CEO Carsten Spohr.

“In June alone, the number of bookings was more than twice as high as at the beginning of the quarter,” the company said.

Lufthansa said it still expected to operate at 40 percent of its pre-crisis capacity this year, leaving its projection unchanged.

Flight capacity will increase to 50 percent in the third quarter, on the back of continued recovery in demand in Europe, increased business travel and the opening up of further markets, such as North America.

Following an announcement from the US that the country would begin to allow vaccinated foreigners to travel to the country at some point, Spohr said in a conference call that Lufthansa was planning on the change to be implemented at the “end of September.”

In terms of the risk posed to the business by the spread of the more-infectious delta variant, Spohr said that the progress of the vaccination campaign was “more important” for the sector.

As a result, Lufthansa expects to book positive operating, or underlying, profit later this year on its path back into the black.

Earnings before interest, tax, depreciation and amortization (EBITDA), a yardstick closely watched by analysts, was still severely negative in the second quarter, with the company registering a loss of about €400 million in the second quarter.

Lufthansa, which also includes Austrian, Swiss and Brussels Airlines, was saved from bankruptcy last June by a German government bailout.

Lufthansa’s chief financial officer Remco Steenbergen said the company was discussing with investors about how to raise the capital needed to pay down the state aid the group received, and said the final figure would be “significantly less” than the €3 billion to €4 billion previously mooted.

The company is in the throes of a painful restructuring to slash costs that will include thousands of job cuts, with 30,000 already axed since the start of the pandemic.

As part of the recovery plan, the airline will slash its current fleet of 800 aircraft to 650 by 2023.


JP Morgan launches bitcoin fund; Uruguay mulls letting businesses accept cryptos

JP Morgan launches bitcoin fund; Uruguay mulls letting businesses accept cryptos
Updated 05 August 2021

JP Morgan launches bitcoin fund; Uruguay mulls letting businesses accept cryptos

JP Morgan launches bitcoin fund; Uruguay mulls letting businesses accept cryptos

DUBAI, RIYADH: The second-largest cryptocurrency after bitcoin, Ethereum, recorded gains early on Thursday as investors anticipate a major upgrade that is aimed to improve and optimize the digital currency.

Its price was up by around 8 percent over the last 24 hours, according to Forbes.

Ether traded at $2,687.71 at 5 p.m. Riyadh time on Thursday, according to data from Coindesk.

Bitcoin traded lower, falling by 2.78  percent to $38,035.85.

In other developments, a report by Pymnts and Bitpay showed consumers in the US are increasingly interested in using cryptocurrencies for their payments.

“The report analyzes a census-balanced survey of 8,008 US consumers who were current and former cryptocurrency owners and cryptocurrency nonowners between Feb. 8 and Feb. 23, 2021,” the report said, cited by Bitcoin.com.

It found that 93 percent of crypto users would consider making purchases using cryptocurrency, while 59 percent of non-crypto owners said they are interested in using it for their purchases in the future.

In Europe, French asset manager Melanion Capital received regulatory approval to launch an exchange-traded fund (ETF) tracking bitcoin price for investors across the region.

Another act to regulate the industry is from a senator in Uruguay who introduced a bill to allow businesses to accept cryptocurrencies as payments.

The bill will provide “legal, financial and fiscal security in the business derived from the production and commercialization” of crypto, CoinDesk has reported.

JP Morgan has launched an in-house bitcoin fund, and has begun pitching it to private bank clients.

Google’s new ad policy for financial products and services has gone into effect – and it allows some crypto ads.

In the East, Hong Kong is seeing a rise in crypto-related crimes, according to Bitcoin.com, with authorities saying it could be due to the increasing popularity of crypto investments.

But in China, a global leader in the crypto scene, these crimes have decreased significantly in recent years.


Saudi Maaden shifts to profitability in the second quarter, year-on-year

Saudi Maaden shifts to profitability in the second quarter, year-on-year
Updated 05 August 2021

Saudi Maaden shifts to profitability in the second quarter, year-on-year

Saudi Maaden shifts to profitability in the second quarter, year-on-year

RIYADH: The Saudi Arabian Mining Co. (Maaden) turned in profits after zakat and tax, at about SR1.1 billion ($2.94 billion) in the second quarter of 2021, compared to losses of about SR434.15 million in the second quarter of 2020, the company announced in a statement on the Saudi Stock Market (Tadawul).

Maaden’s profits increased by 45.1 percent in the second quarter of 2021, compared to profits of about SR761.15 million in the first quarter, while revenues rose by 11.95 percent to SR6.1 billion.

The company attributed its shift to profitability year-on-year to the increase in the average prices achieved for all products except industrial minerals, despite the decrease in the quantities sold of gold, ammonia and alumina.

Profitability was also due to the increase in net profit attributable to Maaden’s stake in joint ventures and the increase in other revenues, despite the decrease in income from term deposits.