One 97 Communications, the parent of fintech major Paytm, informed stock exchanges on March 15 that SoftBank's Munish Varma, a non-executive, non-independent director on its board, has stepped down due to 'personal commitments and other pre-occupations."
Moneycontrol was the first to report earlier today that Varma, managing partner of the Japanese investment behemoth, 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.
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, sources told Moneycontrol.
SoftBank has invested more than $10 billion in Indian new-age companies, with two of its large portfolio companies PB Fintech and Paytm listing on the markets last year. Softbank owns a 17.4 percent stake in Paytm and around 12.4 percent stake in Policybazaar. "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.
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 2,150. SoftBank did not comment on the development.
Such a decision is usually taken by investment firms for two key reasons, according to people Moneycontrol spoke to.
One could be if their presence is not making much of a difference while the number of obligations is quite high. Secondly, when investors are on the board of public companies they have access to the information shared with the board which becomes a big liability for the investors. This also makes it difficult when the fund is looking to pare shares as the disclosure and compliance requirements are significant.
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.
Also read: 'They are unrecognizable': Inside the ‘new’ SoftBank India of 2021
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