SoftBank’s Stake Reduction in Paytm

Japanese investment powerhouse SoftBank has continued its divestment from Paytm’s parent company, One97 Communications, by selling an additional 2% stake through open market operations in the past month, according to a media report.

Ongoing Fiscal Year Sales

Reports from Entrackr suggest that SoftBank has offloaded shares worth ₹3,800 crore in Paytm during the current fiscal year (FY24). This divestment strategy has seen the investment firm conduct sales in multiple tranches, with transactions occurring in May, July, and December 2023, followed by the conclusion of the fourth tranche earlier this week.

Substantial Reduction in Stake

SoftBank’s stake in Paytm has significantly decreased by 61.78% due to successive dilutions. Stock exchange filings indicate that SoftBank’s ownership in Paytm has dwindled from 13.24% at the beginning of FY24 to just over 5%.

Shift in Investment Strategy

SoftBank has been strategically reducing its stake in Indian startups through public market transactions. In addition to divesting from Paytm, SoftBank’s venture capital arm, SVF Growth (Singapore), recently exited its position in the online food delivery platform Zomato, generating approximately ₹1,125 crore in proceeds.

Previous Divestments

Earlier in December, reports surfaced of SoftBank’s sale of $310 million worth of stock in the mother and child care e-commerce platform FirstCry. Since its inception in 2018, SoftBank has garnered $5.5 billion through exits from its Indian portfolio as of August 2023, signifying a significant shift in its investment focus.

Future Outlook

SoftBank’s divestment spree in Indian startups indicates a shift in its investment strategy. As the investment firm continues to streamline its portfolio, further partial or full exits from its investments in Indian companies are anticipated in the future.