SoftBank Exits Paytm with $150M Loss Amid Regulatory Woes

Japan's SoftBank Vision Fund exited Paytm in the June quarter, incurring a loss of around USD 150 million. SoftBank had initially invested USD 1.5 billion in One97 Communications in 2017. The exit was part of a planned move, but further financial hits have impacted Paytm's shares and overall valuation.

Japan's SoftBank Vision Fund has divested its holdings in Paytm, resulting in a loss of around USD 150 million, according to insiders familiar with the matter.

In 2017, SoftBank invested approximately USD 1.5 billion in One97 Communications, the entity behind the Paytm brand, in multiple phases.

Sources indicate that SoftBank's exit resulted in a 10-12 per cent loss, equating to roughly USD 150 million. Pre-IPO, SoftBank held an 18.5 per cent stake in Paytm. Post-IPO, this stake was distributed between SVF India Holdings and SVF Panther.

SVF Panther sold its entire stake during the IPO, amassing Rs 1,689 crore, about USD 225 million.

SoftBank had planned to exit Paytm within 24 months of the IPO, aware of the potential financial loss, an insider revealed. The average purchase price per share was about Rs 800. Paytm's shares, which initially listed at Rs 1,955, have not achieved their issue price of Rs 2,150.

Additional challenges arose when the RBI restricted Paytm Payments Bank Ltd (PPBL) from conducting transactions, pushing shares to a historical low of Rs 310 on May 9.

In the fourth quarter of 2023-24, Paytm reported a loss of Rs 550 crore after writing off Rs 227 crore for its 39 per cent stake in PPBL.

For the fiscal year ending March 31, 2024, Paytm's losses shrank to Rs 1,422.4 crore from Rs 1,776.5 crore in FY23.

Berkshire Hathaway Inc, led by billionaire Warren Buffet, similarly exited Paytm around seven months ago, selling shares below the acquisition price. Initial stakes were bought for Rs 1,279.7 per share, totaling Rs 2,179 crore, but sold at an average price of Rs 877.29 per share, amounting to Rs 1,370.63 crore.

Paytm's shares closed at Rs 467.25 on Friday.

(With inputs from agencies.)