Japan’s Softbank investment arm Softbank Vision Fund exited from Paytm in the June quarter at a loss of around $150 million, sources aware of the development said.
Softbank invested about $1.5 billion in One97 Communications, the owner of Paytm brand, in tranches in 2017. “Softbank has exited Paytm at a loss of 10-12%. The total loss is around $150 million,” one of the sources said.
Softbank held around 18.5% stake in Paytm before the company’s initial public offering (IPO) in 2021. It held a 17.3% stake through SVF India Holdings (Cayman) Ltd and 1.2% through SVF Panther (Cayman) Ltd.
SVF Panther sold its entire stake during the IPO for ₹1,689 crore, about $225 million.
“Softbank announced that it will exit Paytm in 24 months from the time of the IPO. The exit was in line with Softbank’s plan. However, the company did anticipate loss at that time,” another source said.
Softbank had acquired Paytm shares at an average price of about ₹800 apiece.
Paytm share price was listed at ₹1,955, lower by 9%, and has not matched its issue price of ₹2,150 apiece to date.
The share price of Paytm plummeted further after the Reserve Bank of India (RBI) banned its associate firm Paytm Payments Bank Ltd (PPBL) from carrying out transactions. It touched an all-time low of Rs 310 on May 9.
Paytm reported widening of losses to ₹550 crore in the fourth quarter of 2023-24 following the ban on transactions related to its payments bank.
The company during the reported quarter wrote off ₹227 crore investment for a 39% stake in PPBL following future uncertainties associated with its business operations, including the uncertainty of any other regulatory development, etc.
For the year ended March 31, 2024, the company’s loss narrowed to ₹1,422.4 crore. Paytm had recorded a loss of ₹1,776.5 crore in FY23.
Billionaire Warren Buffet’s Berkshire Hathaway Inc also exited Paytm around seven months back by selling shares at a lower-than-acquired price.
The company had acquired 2.6% stake in Paytm for ₹1,279.7 per share at an aggregate value of ₹2,179 crore, as per an official document.
The shares were disposed of at an average price of ₹877.29 apiece, taking the transaction value to ₹1,370.63 crore in November. Paytm’s shares closed at ₹467.25 apiece on Friday.