Exclusive: SoftBank looks to book gains in Paytm, Zomato, may sell shares in open market

SoftBank holds 11.17% stake in Paytm and 3.4% stake in Zomato

SoftBank is looking to book profits by selling small stakes in Paytm’s parent One97 Communications and Zomato as the new-age stocks rally, finally turning into profitable bets for the Japanese investment conglomerate.

SoftBank may sell shares in the two companies in smaller tranches in the open market, rather than through block deals, sources told Moneycontrol.

The investment conglomerate paid around Rs 65-70 apiece for Zomato and Rs 830-840 for Paytm. On June 15, Paytm closed at Rs 900 and Zomato at Rs 74.95. Paytm has surged nearly 70 percent this year, while Zomato has gained 24 percent, thanks to a significant improvement in their financials.

Moneycontrol’s queries to SoftBank did not elicit a response.

SoftBank is set to sell shares at a profit for the first time since payments major Paytm and food aggregator Zomato got listed in 2021, which is in contrast to the previous instances when the Japanese investment bank incurred losses.

Paytm has gained more than 68 percent this year and Zomato has surpassed its IPO price of Rs 76. SoftBank holds an 11.17 percent stake in Paytm and 3.4 percent in Zomato, data compiled by Moneycontrol shows.

Shares of One97 Communications fell after the report went live. At 12:40 pm on June 16, the stock was trading 1.5 percent lower at Rs 878.50 apiece from the previous close on BSE. The stock opened flat but had jumped to an intra-day high of Rs 898.7. Zomato, on the other hand, opened 0.8 percent higher on June 16, but gave up all gains. At 12:40, the stock was trading flat.

SoftBank, one of India’s most active startup investors, which has backed more than 20 unicorns, private companies valued at $1 billion or more, has not participated in a single funding round in 2023 as it turns cautious and selective. But it is seeking partial exits from some of its high-performing companies.

In May, SoftBank offloaded about 2 percent stake in Paytm for $120 million. Earlier this week, it sold a part of its stake in Lenskart to private equity firm ChrysCapital. According to a source, the investment firm yielded over $70 million from the stake sale.

Hard time for SoftBank

In its earnings presentation in November, SoftBank's chief executive Masayoshi Son said the company would monetise “whatever it can” to survive the economic downturn.

SoftBank’s move to book profit by selling stakes in portfolio companies comes days after the company reported a record annual loss of $7.2 billion for the financial year ending March 2023.

SoftBank’s Vision Fund investment unit, through which the Japanese investor deploys capital, reported a record loss of $32 billion.

The Japanese investment conglomerate has cut investments significantly across the globe. In 2022-23, SoftBank invested just $3.2 billion globally against $44.3 billion in 2021-22, according to data shared by SoftBank during its last earnings presentation. In India, too, SoftBank participated in just six deals in 2022, from 17 in 2021, Moneycontrol previously reported.

SoftBank has been a prolific technology investor in India for years, having invested close to $12 billion in the last six years across 42 deals.

At 10.50 am, Paytm was trading at Rs 887.55 on the Natinal Stock Exchange, down 0.60 from the previous close. Zomato was trading a tad lower at Rs 75.05.