SoftBank has sold another 2 percent stake in Paytm’s parent One97 Communications Ltd, its biggest listed investment in India, over the past month via open market operations, generating over $200 million, in another instance of the Japanese investor monetising its bets in the country, its third-largest investment destination amid a funding drought.
SoftBank has been offloading shares regularly over the last month in small tranches through open market transactions and largely at a profit as Paytm’s share price has been above Rs 830 during the period, which was the cost price for the Japanese investor, people aware of the matter told Moneycontrol.
This is the first time that the Japanese investor managed to sell shares of Paytm at a profit since the fintech got listed in November 2021.
In June Moneycontrol first reported that SoftBank will be selling small stakes in Paytm and Zomato via open market operations as the two stocks had finally turned profitable for the Japanese investor.
SoftBank has been paring stake in Paytm since November, when the one-year lock in period for the stock ended either through open market operations or block deals. With the current sale, SoftBank’s stake in Paytm has come down to 9.15 percent.
“SoftBank has been selling Paytm shares since November last year and all the share sales between Rs 550 and Rs 840 were at a loss for the company,” said one of the people quoted above.
“But the share sales that happened over the past month have been at a profit. This has resulted in Paytm becoming a breakeven investment for SoftBank,” the person added.
SoftBank declined to comment.
But in a stock exchange filing later in the day, the Japanese investor confirmed, "SVF India Holdings (Cayman) Ltd has disposed of an aggregate of 12,771,434 equity shares of One97 Communications Ltd in a series of disposals undertaken between May 9, 2023, and July 13, 2023, with the disposal on July 13, 2023, breaching the 2 percent threshold specified in Regulation 29 (2) of the SEBI Takeover Regulations."
The Japanese investor now holds about 9.15 percent in Paytm, the company said in the filing.
In May, the Japanese investment conglomerate, in a stock exchange filing said that SVF India Holdings (Cayman) Ltd, a SoftBank arm, has sold 13,103,148 shares between February 10, 2023, and May 8, 2023, which represents approximately 2.07 percent of the total shareholding for about $120 million, bringing its stake down to 11.17 percent from over 13 percent.
In November 2022, the investment major sold around 4.5 percent stake in Paytm for Rs 1,631 crore through an open market transaction.
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 has turned cautious and selective. However, this is in line with most late-stage investors, who have refrained from making any investment in India, currently the world’s third-largest startup ecosystem over the past year.
In an interview with Moneycontrol earlier his month, Rajeev Misra, a veteran SoftBank executive and CEO of SoftBank Investment Advisers, said that India’s market was “definitely” over-estimated. He also said that for SoftBank to invest in India, capital is not the constraint, but it is waiting for the right opportunity.
While SoftBank has refrained from making investments, the Japanese investor is however seeking partial exits from some of its high-performing companies.
Besides offloading stake in Paytm, the company sold a part of its stake in Lenskart to private equity firm ChrysCapital in Junes. According to a source, the investment firm yielded over $70 million from the stake sale.
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.
(The copy was later updated to reflect information from SoftBank's regulatory filing)
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