SoftBank won’t hasten exit from $1.8-billion holdings in Paytm, Policybazaar, Delhivery as lock-in expiry nears

SoftBank Group CEO Masayoshi Son

Japanese venture investor SoftBank, whose holdings in Paytm, Policybazaar and Delhivery are currently worth $1.8 billion, will pare its stakes gradually over the next two years so as to not trigger a panic selling as the lock-in for pre-IPO investors in the three companies expires over the next 10 days, according to people familiar with the developments.

SoftBank had cumulatively invested around $2.2 billion in these three companies and offloaded shares worth $560 million at their initial public offerings (IPO). This means that it is sitting on a net gain of around $160 million from these bets.

“Although SoftBank is hardly sitting on any net gains on these investments, it is important to note that it has not lost money on a combined basis from these three investments despite a global rout in technology stocks,” said a source.

“It might make partial sales of some of these holdings on the counter to begin with as the lock-in expiry happens, but those will be very little compared to the large holdings in the companies,” the source added.

Moneycontrol has sent queries to SoftBank on the developments and the article will be updated on receipt of any response.

Paytm is the only one among this group of three where SoftBank’s investment is in the red. It had made a total investment of $1.6 billion in the fintech major and taken out around $220-250 million in the company’s IPO last November. With the fintech’s shares trading 70 percent below its IPO price, SoftBank’s remaining stake of around 17.5 percent in the company is currently worth  $900 million.

The Japanese venture fund, however, is sitting on 2X gains from its investments in Delhivery and PB Fintech, the parent company of insurance aggregator Policybazaar.

SoftBank had invested around $199 million in Policybazaar, sold shares worth $250 million in its IPO last year, and its remaining stake of 10-11 percent is worth around $220 million.

It had invested around $380 million in Delhivery, offloaded shares worth $75 million in its IPO, and its current holding of more than 18 percent stake in the logistics company is worth around $670 million.

The Masayoshi Son-led company has invested around $11 billion in Indian start-ups through its two Vision Funds and had made bets of about $3.5 billion prior to that.

‘Monetisation’ was the most-used word during the Softbank founder’s 20-minute-long post-earnings speech on November 11, which was much shorter than his usual 45-minute-long talks. This was his last post-earnings address ‘for the foreseeable future,’ as his CFO Yoshimitu Goto will lead the earnings call hereon.

SoftBank reported a net profit of 3.03 trillion yen ($21.77 billion) in the three months to September 30, thanks to a 5.37 trillion yen ($37 billion) one-time gain related to the early settlement of prepaid forward contracts using Alibaba’s shares, the company’s regulatory filings showed.

Moneycontrol earlier reported that 159.67 crore shares of new-age companies Nykaa, Policybazaar, Paytm and Delhivery are due for lock-in expiry in November – and analysts are of the view that retail investors should exercise caution while trading in these stocks as pre-IPO investors sitting on decent gains may look to sell.