Japanese investor SoftBank, which posted a profit of more than Rs 100 billion after divesting part of its stake in food delivery platform Zomato this week, is looking to exit the business entirely through open market transactions in the coming months, people familiar with the matter said. .
The August 30 Zomato block deal is another example of a profitable secondary share sale to Japanese investors in recent months. Sources say SoftBank has an additional 2.18% stake in Zomato, and the company also plans to sell it back via block transactions in the coming months.
SoftBank sold 10 crore Zomato shares at an average floor price of Rs 94.70 per share against an average cost of Rs 83-85, generating a profit of Rs 10-12 per share.
SoftBank acquired a stake in Zomato after the food tech unicorn acquired fast-trade company Blinkit, formerly Grofers, in June 2022. Sources said that the Japanese investor invested in Zomato at a slightly lower price of Rs 71, but if we add his initial investment in Blinkit, which has depreciated considerably. So, the average cost of SoftBank is around Rs 85 per share. “Zomato is not SoftBank’s initial investment so investors will not keep the shares,” one source said.
“For SoftBank, Zomato is just a monetary transaction, unlike Delhivery, Paytm or PB Fintech, in which Zomato participates as a direct strategic investor. So she’s looking at the deal purely from a monetary perspective. The source added: “He has been waiting for Zomato to become a profitable bet and now, he will look to leave the business altogether when the opportunity arises.” SoftBank and Zomato declined to comment.
Tiger Global also completely exited Zomato earlier this week after selling 12.34 crore shares, or 1.44% of the food technology company.
SoftBank Games in India
Earlier this month, Moneycontrol reported that SoftBank is raising nearly $550 million from portfolio companies listed in India in the first half of 2023. The increase was driven by a strong rise in Zomato stock, Paytm (One97 Communications), Delhivery and PB Fintech.
SoftBank, a major tech investor in India, has yet to invest in a deal this year, but has aggressively capitalized on this year’s monetization opportunities in both the private and public markets. In June, Moneycontrol exclusively announced that SoftBank would sell its stakes in Paytm and Zomato through open market transactions as both new-age shares rallied, becoming a profitable bet for the group. Japanese investment group.
Since then, SoftBank has sold its 2% stake in Paytm through open market transactions, raising about $200 million. He also sold shares of Lenskart, in preparation for its IPO, to ChrysCapital when the eyewear company raised a massive $600 million seed round, which largely consisted of deals auxiliary translation.
According to Rajeev Misra, CEO of SoftBank Investment Advisors, finding the right investment opportunity is a challenge for Japanese investors.
In an interview with Moneycontrol in July, Misra said he thinks the Indian market is definitely “overvalued” and founders will have to readjust their pricing if they want to raise funds.
Misra also said SoftBank, which has backed more than 20 of the nation’s 107 unicorns, could participate in several further rounds of funding at companies in its portfolio. Among the companies in SoftBank’s portfolio, the Edtech unicorn Eruditus is on the market to raise about $150 million.
Last week, Moneycontrol reported that SoftBank was in preliminary talks with the direct-to-consumer unicorn Mamaearth to conduct a $120-150 million pre-IPO round. If discussions bear fruit, it will be one of SoftBank’s few pre-IPO rounds.
On August 30, Zomato closed at Rs 99.70 on the National Stock Exchange, up 5.28% from the previous close.
