SoftBank offloads Rs 3,800 Cr worth shares in Paytm in FY24

Japanese investment heavyweight SoftBank has offloaded its stake worth Rs 3,800 crore in Paytm during the ongoing fiscal year (FY24). This also includes the recent Rs 960 crore divestment in the Indian digital payments firm.

SoftBank sold shares worth Rs 2,840 crore across three tranches — May, July and December 2023— and the fourth tranche concluded earlier this week.

The back-to-back dilution reduced the storied investor’s stake in Paytm by 61.78%. SoftBank used to hold a 13.24% stake in Paytm at the beginning of FY24 and now it has contracted to just little over 5%, as per data sourced from stock exchange filings.

SoftBank has been on a stake-selling spree in companies which filed IPOs in the past two to three years. It exited completely from PolicyBazaar while SoftBank’s Singapore entity also divested entirely from Zomato.

SoftBank’s majority exit from Paytm comes at a time when investment activities in the late and growth-stage startups have to come to a standstill. The investment firm, which also backs firms like Oyo and Lenskart, wrote cheques worth several billions of dollars between 2021 and 2022. It, however, did not make any investment in 2023. The investor is now said to be contemplating investments in a new set of companies in H2 2024.

SoftBank's hiatus from placing new bets will also depend on the performance of three of its portfolio companies – Ola Electric, FirstCry and Unicommerce, which are expected to hit public markets soon.

As of August 2023, SoftBank earned $5.5 billion through exits from its Indian portfolio since its launch in 2018. It is expected to make more partial or full exits in the future.

Meanwhile, retail investors’ holdings in Paytm have gone up significantly in the current fiscal year and its quarter-on-quarter improvement in financial numbers appears to have been driving them to bet on the payments firm's future.

During Q3 FY24, Paytm’s revenue from operations increased 7.98% to Rs 2,138 crore from Rs 1,980.3 crore in the previous quarter. Significantly, its losses dipped 21.66% to Rs 253.6 crore in the said period (Q3 FY24).