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 about $300 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. The recent sale has reduced SoftBank’s stake in Paytm to 9.15%. “Softbank has been selling its Paytm stake since November last year and every sale of the stake at Rs 550 to Rs 840 has been a loss for the company,” said one of the sources quoted above. “However, the sale of shares last month brought a profit. As a result, Paytm has become a break-even investment for SoftBank,” the person added.
SoftBank declined to comment.
In May, the Japanese investment group announced in a stock release that SoftBank arm SVF India Holdings (Cayman) Limited sold 13,103,148 shares from 10 February 2023 to 8 May 2023. This represents an increase of approximately 2.07% in shares, equivalent to approximately one year of total ownership. At $120 million, ownership drops from over 13% to his 11.17%.
In November 2022, the investment giant sold about 4.5% stake in Paytm for Rs 1.631 billion in an open market transaction.
SoftBank, one of India’s most active startup investors, has backed more than 20 unicorns (private companies valued at more than US$1 billion) but has taken a cautious and selective stance. As such, it has never participated in a 2023 funding round. However, this is in line with the sentiment of most late-stage investors who have refrained from investing in India, currently the world’s third largest startup ecosystem, over the past year. Rajeev Misra, a veteran SoftBank executive and CEO of SoftBank Investment Advisors, said in an interview with Money Control earlier this month that the Indian market is “definitely” overvalued. rice field. He also said capital is not a constraint for SoftBank, which is investing in India, and is waiting for the right opportunity.
But while SoftBank is holding back, Japanese investors are seeking a partial exit from some high-performing businesses.
In addition to selling its Paytm stake, the company also sold a portion of its Lenscart stake to private equity firm Chris Capital in June. One source said the investment firm made more than $70 million from the stock sale. SoftBank CEO Masayoshi Son said in a November earnings call that the company will monetize “whatever it can” to weather the economic downturn.
SoftBank’s move to sell stakes in investee companies for profit comes days after the company reported a record full-year loss of $7.2 billion for the fiscal year ending March 2023.
SoftBank’s Vision Fund, whose capital is invested by Japanese investors, reported a record loss of $32 billion.
Japanese investment groups have slashed investments around the world. SoftBank invested just $3.2 billion globally in 2022-23, up from $44.3 billion in 2021-22, according to data SoftBank shared on its latest earnings call. In India, SoftBank participated in 17 deals in 2021, but just six in 2022, Money Control previously reported.
SoftBank has been a big tech investor in India for years, having invested nearly $12 billion in 42 deals over the past six years.
