Japan's SoftBank investment arm, SoftBank Vision Fund, has exited its investment in Paytm, incurring a loss of approximately $150 million. The move occurred in the June quarter, sources familiar with the situation reported. SoftBank had initially invested around $1.5 billion in One97 Communications, the parent company of Paytm, in 2017.

 

Details of the Exit

One of the sources revealed, "SoftBank has exited Paytm at a loss of 10-12 per cent. The total loss is around $150 million." Before Paytm's initial public offering (IPO) in 2021, SoftBank held approximately an 18.5 per cent stake in the company. This included a 17.3 per cent stake via SVF India Holdings (Cayman) Ltd and a 1.2 per cent stake through SVF Panther (Cayman) Ltd.

During the IPO, SVF Panther sold its entire stake for Rs 1,689 crore, equivalent to about $225 million.

"SoftBank announced that it would exit Paytm within 24 months of the IPO. The exit was in line with SoftBank's plan, although the company did anticipate a loss at that time," another source mentioned.

 

Investment and Stock Performance

SoftBank had acquired Paytm shares at an average price of Rs 800 per share. However, Paytm's stock performance has been less than stellar. Listed at Rs 1,955—9 per cent lower than its issue price of Rs 2,150—the shares have never reached their initial issue price. Following regulatory issues, including a ban from the Reserve Bank of India (RBI) on transactions by its associate firm Paytm Payments Bank Ltd (PPBL), Paytm's share price plummeted to an all-time low of Rs 310 on May 9.

In the fourth quarter of 2023-24, Paytm reported a widening loss of Rs 550 crore, exacerbated by the ban on PPBL transactions. During the same quarter, the company wrote off a Rs 227 crore investment in PPBL due to uncertainties regarding its business operations and potential regulatory developments.

 

Year-End Financials and Other Exits

For the year ending March 31, 2024, Paytm's losses narrowed to Rs 1,422.4 crore, compared to Rs 1,776.5 crore in the previous fiscal year.

 

Notably, billionaire Warren Buffet's Berkshire Hathaway Inc also exited its investment in Paytm about seven months ago, selling shares at a lower price than acquired. Berkshire Hathaway had bought a 2.6 per cent stake in Paytm for Rs 1,279.7 per share, totaling Rs 2,179 crore. The shares were sold at an average price of Rs 877.29 each, resulting in a transaction value of Rs 1,370.63 crore in November.

As of Friday, Paytm's shares closed at Rs 467.25 each.