SoftBank cuts 2.17% stake in Paytm, stock down 4%

Japanese investment giant SoftBank Group Corporation has cut a 2.17 percent stake in troubled Indian fintech unicorn Paytm, Reuters reported. The stake sale was seen in an exchange filing on February 29.

The conglomerate, which had a 17.5 percent stake in Paytm in September 2022, now holds only 2.83 percent of the Indian payments startup, down from 5.01 percent. This reduction in ownership has been ongoing for over a year, with the most recent cut occurring in January 2024.

Stake Cut Before RBI Directive

SoftBank sold a majority of its stake in Paytm before regulatory scrutiny caused the once-celebrated Indian fintech firm’s shares to dive, according to the Vision Fund’s executive managing partner, as per a Bloomberg report.

The Tokyo-based tech investor saw uncertainty growing in India’s regulatory environment, as well as over Paytm Payments Bank Ltd.’s license, Navneet Govil told Bloomberg News on February 8.

“We felt it was prudent to start monetizing," the Vision Fund’s finance chief said, as quoted by Bloomberg. “We’re glad we did a good portion of Paytm before the recent stock correction."

While some global investors, such as Warren Buffett's Berkshire Hathaway and China's Alibaba Group, exited Paytm in 2023, others, including a Netherlands-based unit of Chinese fintech firm Ant Financial, also reduced their stake.

Paytm Stock Takes Hit

Shares of Paytm were trading down by 4 percent at ₹391.15 after the news broke.

The company's stock has faced challenges, falling by 48.5 percent and losing around $2.8 billion in value since the Reserve Bank of India's order on January 31. The directive required Paytm to wind down its banking arm Paytm Payment Bank (PPBL) due to persistent non-compliance with regulations.

As of the end of Q3 FY24, foreign institutional investors (FIIs) collectively held a 63.7 percent stake in Paytm, marking an increase from 60.09 percent in Q2 FY24. Concurrently, domestic institutional investors (DIIs) also raised their stake during the third quarter of the current fiscal year, bringing their stake to 6.1 percent, up from 4.1 percent in the previous quarter (Q2FY24).

(With inputs from Reuters and Bloomberg)