SoftBank sells 2% stake in parent company Paytm for $114 million

News update

SoftBank sold an additional 2% stake in One97 Communications, the parent company of Paytm, reducing its stake to around 5.06%. The Japanese investor, who held nearly 7% last year, made an open market sale for nearly Rs 950 crore. The drawdowns took place in several tranches between December 19, 2023 and January 20, 2024, breaching the 2% threshold set in Sebi’s takeover regulations.

In a statement, SoftBank noted, “SVF India Holdings (Cayman) Limited has disposed of a total of 12,706,807 shares in One97 Communications Ltd.

Shares of Paytm have rallied 20% in the past month, which has influenced SoftBank’s recent divestment strategy. Meanwhile, domestic retail investors increased their stake in Paytm to 12.85% in the third quarter ending December 2023, reflecting bullish sentiment. The share of domestic institutions also increased to 6.06% from 4.06%.

The positive sentiment is attributed to Paytm’s improving operational performance. For Q3FY24, the fintech reported a 38% rise in consolidated revenue to Rs 2,850 crore, accompanied by narrowing in losses to Rs 222 crore.

SoftBank has been steadily diluting its stakes in Indian startups through public market deals. Apart from the ongoing stake sale in Paytm, SoftBank’s venture capital fund, SVF Growth (Singapore) Pte Ltd, exited Zomat, fetching around Rs 1,125 crore. The investor also completed its exit from PB Fintech, making a three-fold return of around Rs 914 crore.

Sumer Juneja, head of India and EMEA at SoftBank Investment Advisers, expressed the investor’s readiness to reinvest in Indian startups. In an interview, Juneja said: “There is the performance of the companies and then there is the factor of how robust the market is. So whenever there is an opportunity, we will sell.”

He stressed the importance of every investor staying excited about future investments and mentioned a disciplined approach to both entering and exiting the market.

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