Softbank offloads stake in Paytm; incurs ~$150 Million loss

15 Jul 2024 , 03:01 PM

Softbank Vision Fund, Japan’s investment arm, exited Paytm in the June quarter at a loss of approximately USD 150 Million, according to persons familiar with the situation. Softbank invested in 2017 around USD 1.5 billion in One97 Communications, the owner of the Paytm brand, in tranches.

Softbank held around 18.5% stake in Paytm prior to the company’s first public offering (IPO) in 2021. It owned 17.3% through SVF India Holdings (Cayman) Ltd and 1.2% through SVF Panther (Cayman) Ltd.

SVF Panther sold its whole stake at the IPO for ₹1,689 Crore, or approximately USD 225 Million.

Softbank has declared that it will exit Paytm in 24 months following the IPO. The exit was consistent with Softbank’s intentions. However, another source stated that the corporation anticipated a loss at the time.

Softbank purchased Paytm shares at an average price of around ₹800 per share.

Paytm’s share price was listed at ₹1,955, down 9%, and has yet to match its issue price of ₹2,150 per.

Paytm’s share price dropped further in May, when the Reserve Bank of India (RBI) prohibited its partner firm, Paytm Payments Bank Ltd (PPBL), from conducting transactions. It touched an all-time low of ₹310 on May 9.

Paytm’s losses increased to ₹550 Crore in the fourth quarter of 2023-24 as a result of the prohibition on payments bank transactions.

During the reporting quarter, the company wrote off a ₹227 Crore investment for a 39% share in PPBL due to future risks associated with its business activities, such as the uncertainty of any new regulatory developments.

According to an official document, Softbank acquired a 2.6% stake in Paytm for ₹1,279.7 per share, totaling ₹2,179 Crore. 

At around 2.29 PM, Paytm was trading 1.20% higher at ₹471.55, against the previous close of ₹465.95 on NSE. The counter touched an intraday high and low of ₹476.70, and ₹462.05, respectively.

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