SoftBank sells 2% stake in Paytm in first profitable sale
Japanese investment giant SoftBank has sold a 2% stake in Paytm's parent company One97 Communications Ltd., raking in over $200 million. This is the first profitable sale of Paytm shares for SoftBank since the fintech company went public in November 2021. The shares were sold through open market operations over the past month. After this sale, SoftBank's stake in Paytm has dropped to 9.15%.
Profitable share sale leads to break-even investment
SoftBank has been trimming its stake in Paytm since November last year. All the share sales between Rs. 550 and Rs. 840 were at a loss for the Japanese investment firm. However, in the last month, share sales have turned a profit, making Paytm a break-even investment for SoftBank, according to Moneycontrol. The break-even point for investment is determined when the market price of an asset becomes equal to or surpasses the original cost.
SoftBank's cautious approach to investments
SoftBank is amongst India's most active start-up investors and has backed more than 20 unicorns and private companies valued at $1 billion or more. However, last year, it did not participate in any funding rounds for Indian unicorns, despite backing over 20 of them in the past. Rajeev Misra, CEO of SoftBank Investment Advisers, told Moneycontrol that the Indian market is 'definitely' over-estimated and that the company is waiting for the right investment opportunity.
Partial exits from high-performing companies
Apart from selling stake in Paytm, SoftBank has also sought partial exits from other high-performing companies. Earlier this year, the firm fully exited PolicyBazaar parent, taking away a profit of 225%. In June, the Japanese investor sold a portion of its stake in Lenskart to private equity firm ChrysCapital, earning over $70 million from the sale. This move to sell stakes and book profits follows SoftBank's record annual loss of $7.2 billion for the financial year ending March 2023.
SoftBank has trimmed investments across the globe
SoftBank has reduced investments across the world. In 2022-23, it invested merely $3.2 billion globally against $44.3 billion in 2021-22, according to data shared by the company during its last earnings presentation. In India as well, SoftBank participated in just six deals in 2022 in contrast to 17 such deals in 2021.
