Munish Varma, the managing partner of Japanese investment behemoth SoftBank, is preparing to step down from the boards of Paytm parent One97 communication and PB Fintech, less than six months after the companies went public in India, said people familiar with the matter, adding that an announcement to this effect will be made shortly to stock exchanges.
The action is consistent with SoftBank's move globally—it steps away from board positions after its portfolio companies get listed. SoftBank will remain as an investor and retain its shareholding in both these firms, the people cited above said, asking not to be named.
SoftBank has invested over $10 Billion in Indian new age companies, with two of its large portfolio companies PB Fintech and Paytm listing on the markets in 2021.
"They will not be selling their shares, they are stepping away from the board as they are less involved in public companies," one of the persons cited above said.
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The move comes at a time when both stocks have been hammered in the last few months, amid a broader selloff in new age listed stocks. While PB Fintech is down 28.57 percent from its issue price of Rs 980 a share, Paytm is down 67.67 percent from its issue price of Rs 2150 a share
While SoftBank and Paytm could not be reached, PB Fintech founder Yashish Dahiya declined to comment.
SoftBank owns 17.4 percent stake in Paytm and around 12.4 percent stake in Policybazaar. Fortunes of SoftBank soared with the public listing of PB Fintech which runs Policybazaar. The value of its stake escalated to over Rs 6,687 crore.
Such a decision is usually taken by investment firms following two key reasons.
One could be if their conduct is not making much of a difference while the number of obligations is quite high.
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Secondly when investors are on the board of public companies they have access to the information shared on the board which becomes a big liability for the investors.
So, there is a high obligation and with respect to that very limited say in decision making which makes it difficult when the fund is looking to sell down its position.
At $51 billion, SoftBank’s Vision Fund 2 is the world’s second biggest pool of private capital even though it is smaller than founder Masayoshi Son’s ambitions and his debut $100-billion fund.
The development happens at a time when two of its other blue eyed companies -- OYO and Swiggy are also in advance talks to go public.
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