Japan's SoftBank takes 10% hit on fintech major Paytm as rout continues

Japanese firm gradually exiting its investment since Paytm IPO

Japan’s SoftBank Group Corp has made a 10 per cent or $100 million loss on its $1.4 billion investment in One 97 Communications (Paytm) so far. This comes even as the Indian company struggles to calm its shares after the action taken against its payment bank by the Reserve Bank of India (RBI).

SoftBank currently owns around 5 per cent worth Rs 1,333 crore in One 97 Communications.

The Japanese firm had invested in One97 Communications at the rate of Rs 820 a share in May 2017 (after all adjustments in the company’s shares).

It held around 18.5 per cent stake at the time of the company's initial public offer (IPO) in November 2021 that was launched at Rs 2,150 a share. Since then, the share price has gradually come down.

Once the lock in on its shares was lifted, SoftBank exited the company gradually after it was listed and now holds a minority stake.

In December and January, the Japanese firm had sold 2 per cent stake in the company bringing it down to just 5 per cent.

“SoftBank is sitting on Rs 90 on its average investment of Rs 100 as of now,” said sources close to the development.  

On Friday, One 97 Communications shares closed 6 per cent lower at Rs 419.85 a share. Its share price fell 45 per cent after the RBI took action against PayTM Payment Bank on January 31.

Apart from SoftBank, several other marquee shareholders are sitting on notional losses (see chart).

The RBI has, however, made it clear that action has been taken against the payment bank and not the app. 

One97 Communications has also denied reports of investigation or violation of foreign exchange rules by the company or its associate Paytm Payments Bank. An email sent to SoftBank on Friday did not elicit any response. 

According to a presentation by SoftBank during its December quarter results on Thursday, the fair value of its India investments, via Vision Funds I and II, was worth $13.8 billion as of December last year. 

The two funds have invested $11 billion into Indian companies during the last six years. They have made full exits in food delivery app, Zomato, and PolicyBazaar, an insurance app, recently.

SoftBank has made exits of around $6.5 billion from India till mid-January.

In November last year, Warren Buffet’s BH International had also sold its 2.6 per cent stake in One97 Communications, thus making a Rs 507 crore loss.