SoftBank Group Corp shares surged 11 per cent after the investment conglomerate scored a $11.2 billion gain in the value of its stake in DoorDash Inc following the U.S. food delivery app’s blockbuster stock market debut.
SoftBank, which invested $680 million in DoorDash in the last three years, saw the value of its 25 per cent stake in the company rise to $11.9 billion on the first day of trading in New York.
SoftBank’s shares climbed as much as 19 per cent in Tokyo trading and closed at new two-decade highs at 8,306 yen.
DoorDash shares ended trading up 87.5 per cent following their debut on Wednesday, valuing the company at $68.4 billion, more than four times its valuation in a private fundraising round six months ago.
SoftBank’s DoorDash gains are a boon to Chief Executive Masayoshi Son’s efforts to revive its $100 billion Vision Fund, which recorded a string of losses in the past year on soured bets ranging from office space-sharing start-up WeWork to dog-walking startup Wag.
The group’s growing market capitalisation, which neared $170 billion on Thursday, raises the costs of management buyout proposals, which have been debated internally but face considerable opposition.
Last month, SoftBank said its Vision Fund was now worth about $76.4 billion, slightly more than the $75 billion paid for its 83 investments, following the rebound in public markets from a coronavirus-induced downturn earlier this year. It has also booked other gains such as $4.5 billion from exited investments.
SoftBank has been investing on a smaller scale with its Vision Fund 2 as it looks to win the trust of backers of the first fund, like Saudi Arabia’s sovereign wealth fund, and demonstrate the strength of its investment thesis.
SoftBank’s recent wins include a rally in the shares of ride-hailing app Uber Technologies Inc, where it is a top shareholder, and the sale of chip designer Arm to Nvidia Corp for $40 billion.
Uber said this week it was selling its struggling self-driving car and air taxi businesses, raising questions over whether SoftBank has backed a likely winner in the shift to autonomous driving.
Vision Fund had invested in DoorDash over four fundraising rounds. It paid $280 million for its first DoorDash stake in March 2018, before buying more shares over two rounds in the following year for about $350 million.
The fund made its last DoorDash investment worth about $50 million in June 2020, according to regulatory filings.