SoftBank has sold an additional 2% stake in Paytm, securing Rs 950 crore in the process

SoftBank’s SVF India Holdings has further reduced its involvement with Paytm by selling more shares in One 97 Communications, the parent company of the digital payment app. In the most recent transaction, SVF India Holdings sold 12,706,807 equity shares through open market transactions between December 19, 2023, and January 20, 2024, lowering its stake to 5.01%.

SoftBank’s Approach

Under the guidance of Masayoshi Son, SoftBank has consistently diminished its investment in listed Indian startups through public market transactions. In addition to the Paytm stake sale, SoftBank’s venture capital fund, SVF Growth (Singapore) Pte Ltd, also divested from the online food delivery platform Zomato, yielding about ₹1,125

As of Q3 FY24, foreign institutional investors (FIIs) collectively increased their stake in Paytm to 63.7%, up from 60.09% in the previous quarter. Domestic institutional investors (DIIs) also raised their stake to 6.1%, compared to 4.1% in Q2 FY24. Conversely, retail investors reduced their stake to 30.2% in Q3 FY24 from 35% in Q2 FY24.

Berkshire Hathaway’s Exit

Paytm’s founder and CEO, Vijay Shekhar Sharma, maintains a 19% stake in the company. In November 2023, Warren Buffett’s Berkshire Hathaway sold its entire 2.46% stake, incurring a loss of ₹507 crore on its initial investment made five years ago. The stock has faced a decline of 65% from its IPO price of ₹2,150 per share, currently trading at ₹749.

Q3FY24 Financial Highlights

Paytm reported positive financial results for Q3FY24, with consolidated losses narrowing to ₹222 crore from ₹392 crore in the same period last year. Revenue saw a 38% YoY increase, reaching ₹2,850 crore against ₹2,062 crore from last year. In Q3FY24, Paytm surpassed 100 million active customers for the first time and is actively integrating artificial intelligence into its daily operations to enhance overall efficiency.

In response to Paytm’s Q3 performance, global brokerage firm CLSA upgraded the stock from ‘outperform’ to ‘buy’ and raised the target price to ₹960 from ₹925.

Conclusion

SoftBank’s ongoing reduction in its stake in Paytm, coupled with the evolving ownership and the positive Q3FY24 financial performance, indicate a dynamic phase for the company. Paytm’s focus on AI integration and achieving milestones in active customer numbers contribute to its evolving narrative in the digital payment sector.

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