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Paytm’s stake sale: How SoftBank cashed out Rs 3,800 crore in FY24

SoftBank reduces its stake in Paytm by 61.78%

Japanese investment giant SoftBank has sold an additional 2 per cent stake in Paytm’s parent company, One97 Communications, over the last month through open market operations. The investment firm has sold its shares worth Rs 3,800 crore in Paytm during the ongoing fiscal year (FY24), according to media reports.

The firm offloaded 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 per cent. As per data sourced from stock exchange filings, SoftBank’s stake in Paytm has decreased from 13.24 per cent at the beginning of FY24 to just a little over 5 per cent.

SoftBank exits from other Indian startups as well

SoftBank has been on a stake-selling spree in Indian startups that have filed IPOs in the past two to three years. It exited completely from PolicyBazaar while SoftBank’s Singapore entity also divested entirely from Zomato. In December last year, SoftBank sold its stock worth $310 million in a second round sale in mother and child care e-commerce platform FirstCry.

Paytm’s stake sale: How SoftBank cashed out Rs 3,800 crore in FY24

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

SoftBank pauses new investments in India

SoftBank’s majority exit from Paytm comes at a time when investment activities in the late and growth-stage startups have 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.

Paytm sees improvement in financial numbers

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 per cent to Rs 2,138 crore from Rs 1,980.3 crore in the previous quarter. Significantly, its losses dipped 21.66 per cent to Rs 253.6 crore in the said period (Q3 FY24).

Paytm, which went public in November 2023, is the largest digital payments company in India with over 330 million users and 21 million merchants on its platform. It offers a range of services such as mobile wallets, UPI, QR code payments, e-commerce, gaming, wealth management, insurance and lending.

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