Paytm Parent One97 Shares Fall on Report of Softbank Stake Sale

Paytm parent One 97 Communications’ shares fell as much as 10 percent to their lowest since May after Reuters reported that SoftBank will sell shares worth up to $215 million (roughly Rs. 1,755 crore) in the Indian e-payment platform. SoftBank is selling a 4.5 percent stake in Indian e-payments giant Paytm’s parent One 97 Communications worth up to $215 million through a block deal, according to a term sheet reviewed by Reuters.

SoftBank’s Vision Fund is the second-largest shareholder of Paytm, whose shares have tumbled more than 60 percent since it went public a year ago. SoftBank had a 17.5 percent stake in the digital payments and fintech company as of September 30.

The stock is being sold in a range of Rs. 555 to Rs. 601.45 per share, the term sheet said, the lower end of the range offering a 7.7 percent discount to the company’s last closing price. Final pricing will be set later on Thursday.

The sale is the latest in a string of divestments that SoftBank has made in the past few months, after its flagship Vision Fund unit booked nearly $50 billion (roughly Rs. 4,08,150 crore) in losses in just six months.

The shares are being bought largely by hedge funds, including Millennium Capital, Segantii Capital Management, Ghisallo Capital Management, said a person with direct knowledge of the matter, with other buyers including Norges Bank, Norway’s central bank The person requested anonymity because the details were still confidential.

SoftBank, Paytm, Millennium, Segantii, Ghisallo and Norges Bank did not respond to requests for comment.

SoftBank is selling 29 million shares in the deal which is being led by Bank of America, according to the term sheet.

The news comes a day after the lock-in period for investors in Paytm’s November 2021 initial public offering closed. Shares of the company opened Thursday at Rs. 546.05, 9 percent lower than the previous close.

SoftBank raised $2.4 billion (roughly Rs. 19,600 crore) selling shares in T-Mobile US earlier this year.

Vision Fund sold a range of assets in the April-June quarter — including ridehailer Uber and property platforms Opendoor and KE Holdings, which operates China’s Beike — for a realised gain of $5.6 billion (roughly Rs. 45,700 crore).

Paytm went public last year in India’s biggest-ever initial public offering (IPO), but the shares skidded as low as 70 percent below listing price in the months after the IPO.

While SoftBank has invested $1.6 billion (roughly Rs. 13,060 crore) into the digital payments firm over the years, among its biggest investments in India, at Paytm’s current share price, the 17.5 percent stake SoftBank held in the company before Thursday’s share sale is worth only about $900 million (roughly Rs. 7,350 crore).

© Thomson Reuters 2022