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SoftBank shares reach highest level since 2000 on recovery hopes

Sentiment brightens on buybacks and IPO for insurance startup Lemonade

SoftBank Group CEO Masayoshi Son: Investors in the technology conglomerate have been cheered by Son's vow to buy back a huge slice of the company's stock. (Photo by Yuki Kohara)  

TOKYO -- Shares in SoftBank Group soared to a 20-year high on Tuesday, buoyed by the Japanese technology group's share buybacks and a strong initial public offering by Lemonade, one of its U.S. startup investments.

SoftBank shares jumped 272 points, or 4.6%, to close at 6,190 yen in Tokyo on Tuesday, hitting their highest point since March 2000. The runup has the stock up 30% so far this year. SoftBank has more than doubled since March, when the spread of the novel coronavirus sent global stock markets into a tailspin.

The recent surge has in part been supported by SoftBank itself, which completed a 500 billion yen ($4.7 billion) share buyback in June and plans to buy back an additional 2 trillion yen worth of shares. Founder and CEO Masayoshi Son has announced plans to sell 4.5 trillion yen of assets, including shares in U.S. wireless carrier T-Mobile, to reduce the group's debt and fund the share buybacks.

During the company's annual shareholders' meeting in June, Son said SoftBank had made "80% progress" on its plans.

In addition to Son's share buyback pledge, recent gains on investments by the tech conglomerate have improved investor sentiment. Shares in online home insurance provider Lemonade, of which SoftBank owns around 22%, more than doubled after its Thursday market debut to reach a market value of $3 billion. The stock price has kept up the momentum, jumping 17% on Monday.

Lemonade is not part of Son's $100 billion Vision Fund but has helped to fuel improved hopes for those investments. The Vision Fund sustained heavy losses after its portfolio was hit hard by the coronavirus pandemic for the year ended March, posting a historic $17 billion loss.

SoftBank itself posted a 961 billion yen net loss for the year ended March, its biggest since its shares listed in 1998.

Despite SoftBank's recent jump, there is still a more than 50% discount in the share price versus what Son calls the company's shareholder value: the market value of the shares it owns, most notably its stake in Alibaba Group Holding, minus the group's net debt.

SoftBank's shareholder value was 12,455 yen per share as of Tuesday, compared with a stock price of 6,190 yen, according to the company's website.

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