SoftBank arm SVF India Holdings trims stake in Paytm by 2.13%

SVF India Holdings (Cayman), an arm of SoftBank, has further reduced its stake in One97 Communications, the parent company of fintech giant Paytm. The latest sell-off, amounting to 2.13 per cent of Paytm's equity, brings SVF India's overall holding in the company down to 7.01 per cent.

The series of stake sales occurred between July 14, 2023, and December 18, 2023, with the final transaction breaching the 2 per cent threshold specified in Regulation 29(2) of the SEBI Takeover Regulations. This move follows previous divestments by SVF India Holdings, which sold 4.5 per cent of its stake in November 2022 and an additional 2.07 per cent in the first half of 2023.

The sale reflects SoftBank's proactive approach to managing its investment portfolio, capitalising on Paytm's stock price, which has hovered above Rs 830 in the past month.

The Japanese tech conglomerate stressed that the stake sale has been profitable, reinforcing its strategic decision to divest from Paytm amid favourable market conditions.

The move aligns with SoftBank's broader strategy, as it recently divested stakes in multiple portfolio companies, including PB Fintech and Delhivery. The decision to trim investments in various entities comes as SoftBank addresses overall losses from its primary SoftBank Vision Fund (SVF), adapting to market dynamics, and optimising its investment portfolio.

In the Indian startup landscape, SoftBank's portfolio has shown resilience, with about 50 per cent of its invested companies nearing or surpassing break-even points, according to a note by investment bank Bank of America in May. The startups in SoftBank's portfolio have demonstrated agility by significantly cutting costs in the last six to nine months, navigating a challenging funding environment amid macroeconomic headwinds.

While SoftBank strategically realigns its holdings, Paytm continues to make strides in the fintech space, reporting a 78 per cent YoY decline in net loss to Rs 167.5 crore in Q4 FY23. The company's operating revenue saw a substantial 51 per cent increase, reaching Rs 2,334.5 crore in the same quarter. Notably, Paytm achieved EBITDA profitability in the December quarter, with EBITDA before ESOP costs standing at Rs 101 crore in the March quarter.

As the fintech sector evolves, SoftBank's recalibration of its investments reflects its commitment to navigating market dynamics and optimising returns in an ever-changing landscape.

Paytm shares rose 1.90 per cent to Rs 650.50 apiece on the NSE on Friday, December 22.