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SoftBank continues its sell-down in Paytm, offloads 2% stake

This latest transaction, which was executed through open market operations, reduces the Japanese conglomerate's stake in Paytm to approximately 5.06%.

Paytm

SoftBank Group has further reduced its stake in Indian digital payments giant Paytm, selling an additional 2% of its holding in the company, Reuter reported. This latest transaction, conducted between December 19, 2023, and January 20, 2024, by SoftBank’s entity SVF India Holdings (Cayman) Limited, reduces the Japanese conglomerate’s stake in Paytm to approximately 5.06%.

The move is part of a broader strategy by SoftBank to divest its shares in the Indian startup, where it had been a significant investor. The sale, amounting to 12,706,807 equity shares, was executed through open market operations, Mint reported. The decision to sell follows a trend of stake reductions by major investors in Paytm, including Berkshire Hathaway and Alibaba Group.

In November, Warren Buffett led Berkshire Hathaway, through its subsidiary BH International, divested its entire stake of 2.5% in Paytm, garnering nearly Rs 1,370 crore. Back in February last year, Chinese e-commerce giant Alibaba also offloaded its entire 3.4% stake in Vijay Shekhar Sharma-led company via a block transaction worth Rs 1,378 crore.

Meanwhile, the current transaction’s financial details remain undisclosed, but it is indicative of SoftBank’s shifting investment strategy in India. Over the past year, SoftBank has been actively liquidating its positions in various Indian startups, including its exit from Zomato and PB Fintech, realizing substantial returns, a recent report by Moneycontrol highlighted.

Furthermore, the report noted that domestic retail investors have shown increased interest in Paytm, with their stake rising to 12.85% in the third quarter of 2023, a jump from 8.28% in the previous quarter. Reportedly, domestic institutions likely absorbed a portion of the shares offloaded by SoftBank, as their stake also increased to 6.06%.

Being one of India’s prominent digital payments platforms, Paytm’s journey has been closely watched by investors and market analysts alike. In the past, Paytm has faced various market pressures. The company’s inclusion in the MSCI Global Standards Index had raised expectations, but regulatory changes and market dynamics have posed challenges. The Reserve Bank of India’s tightening of consumer lending norms and increased capital buffer requirements for NBFCs and banks have further focused attention on Paytm.

Despite the hurdles, Paytm has shown an improvement in its operational performance. In the third quarter ending December 2023, the fintech firm reported a 38% rise in consolidated revenue, reaching ₹2,850 crore, and successfully narrowed its losses to ₹222 crore. Paytm’s growth, especially in its payment business, has been notable, with the company surpassing 100 million active customers and integrating artificial intelligence into its operations for enhanced efficiency.

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