By Anton Bridge

TOKYO (Reuters) -Japan's SoftBank Group swung to a 1.18 trillion yen ($7.7 billion) net profit in the three months to September, as the tech giant benefited from higher share prices of listed companies in its Vision Fund investment vehicles.

The results handsomely beat expectations for a 287 billion yen ($1.87 billion) profit based on the average of four analyst estimates compiled by LSEG, and compare with a loss of 931 billion yen in the same period last year.

The results show SoftBank's more cautious approach to investment is bearing some fruit. Masayoshi Son's investing juggernaut was forced into a prolonged period of retrenchment when interest rate hikes caused the value of its holdings in high-growth tech start-ups to crater.

Now some of these valuations are beginning to recover, pushing the Vision Fund unit to an investment gain of 608 billion yen. The unit has been in the black in four of the last five quarters.

"After we were making large losses in the Vision Funds, we were very conservative. So now we were able to generate good profits as a result of learning from that," SoftBank Chief Financial Officer Yoshimitsu Goto said. "Our investment gains were very strong this quarter."

He said he had high hopes for companies in SoftBank's investment portfolio that were getting closer to public listings.

Goto also said he would be watching the impact on its portfolio of any tariffs levied against China by the incoming Donald Trump administration, though the group has reduced its direct China exposure in recent years.

Some of the Vision Funds' largest holdings, such as ride hailing giant Didi, are based in China or have large operations there, but as disruptive companies they are less affected by government policies, Vision Fund CFO Navneet Govil said in an interview.

"The types of companies we're investing in are not as sensitive to the administration that's in power," Govil told Reuters. He said the Vision Funds began investing in 2017, during Trump's first presidency.

The two Vision Funds fully or partially exited investments worth $1.85 billion. They fully exited 10 portfolio companies including Chinese artificial intelligence firm SenseTime and India's payment firm PayTm.

SoftBank and its Vision Fund investment vehicles have had few opportunities to cash out amid a muted IPO market, with the exception of the blockbuster listing of chip designer Arm in September 2023.

But in the quarter just passed, listings of Brainbees Solutions, which operates Indian retailer FirstCry, and electric motorbike maker Ola Electric Mobility, generated a combined gross gain of over $1 billion.