SoftBank Takes $150 Million Hit Exiting Paytm in June Quarter

Japan’s SoftBank Vision Fund sold its remaining shares in Paytm during the June quarter, resulting in a loss of around $150 million, as reported by PTI. SoftBank had invested about $1.5 billion in Paytm’s parent company, One97 Communications, in 2017.

Investment and Loss Details

“SoftBank has exited Paytm with a loss of 10-12 percent, totaling around $150 million,” a source said. Before Paytm’s IPO in 2021, SoftBank held an 18.5 percent stake. This included a 17.3 percent stake through SVF India Holdings (Cayman) Ltd and 1.2 percent through SVF Panther (Cayman) Ltd.

Previous Sales and Share Prices

SVF Panther sold its entire stake during the IPO for ₹1,689 crore (about $225 million). SoftBank had planned to exit Paytm within 24 months of the IPO, anticipating a loss. SoftBank had acquired Paytm shares at an average price of ₹800 each.

Paytm’s share price listed at ₹1,955, 9 percent lower than expected, and hasn’t reached its issue price of ₹2,150 to date. The shares hit an all-time low of ₹310 on May 9 after the Reserve Bank of India (RBI) banned Paytm Payments Bank Ltd (PPBL) from transactions.

Financial Impact on Paytm

Paytm reported a loss of ₹550 crore in the fourth quarter of 2023-24 due to the ban on PPBL transactions. The company also wrote off ₹227 crore for its 39 percent stake in PPBL, citing future uncertainties and potential regulatory developments.

For the fiscal year ending March 31, 2024, Paytm’s loss narrowed to ₹1,422.4 crore, down from ₹1,776.5 crore in FY23.

Other Exits

Warren Buffet’s Berkshire Hathaway Inc exited Paytm seven months ago, selling its shares at a lower price than purchased. Berkshire Hathaway had bought a 2.6 percent stake in Paytm for ₹1,279.7 per share, totaling ₹2,179 crore. The shares were sold at an average price of ₹877.29 each, amounting to ₹1,370.63 crore in November.

Paytm’s shares closed at ₹467.25 each on Friday.