Japanese internet conglomerate SoftBank has reaped the fruit of its Indian investments in e-commerce firm Flipkart and budget hospitality chain OYO by posting over $1 billion in gains in each bet for the financial year through 31 March 2019.
In its 2018-19 consolidated earnings report, the Masayoshi Son-led company reported a $1.33 billion gain on its investment in Flipkart. In August 2018, SoftBank had exited Flipkart when Walmart acquired the firm. SoftBank, which had invested around $2.4 billion into Flipkart, said the total size of the stake sale was around $4 billion.
However, the sale was also subjected to a 43.68% tax amounting to $591.55 million. Indian income tax regulations stipulate that capital gains on investments in business entities in the country be subject to tax. Since the stake sale happened within 24 months of its investment, the sale was subjected to short term capital gains tax.
SoftBank’s investment in hospitality chain OYO also saw its fair value rise to $1.4 billion. The gains were part of a larger $12.56 billion, contributed by its other portfolio companies that also include cab-hailing major Uber, where the rise in the fair value of its investment amounted to $3.81 billion.
Likewise, the SoftBank Vision Fund, from which the investment was made in both entities, had made a total of 69 investments worth $60.1 billion as on 31 March 2019, the earnings report stated. The total fair value of its investments stood at $72.3 billion.
SoftBank Vision Fund’s other Indian bets include omnichannel baby products retailer FirstCry, online grocery firm Grofers, digital payments and financial services major Paytm and logistics firm Delhivery.
For the financial year 2018-19, SoftBank reported a 80.5% rise in operating income while its net income witnessed a 17.5% rise at $13.26 billion. Income before tax rose more than four-fold to $15.41 billion while total comprehensive income saw a 13% rise at $13.69 billion.