Paytm Shares Slump 10% After SoftBank Unit Cuts Stake
A unit of Japan’s SoftBank Group Corp. is selling a 4.5% stake in the parent of India’s leading digital payments brand Paytm, seeking to pare back its holding in a company whose share have tumbled 72% since its initial public offering last year.
(Bloomberg) -- Shares of One 97 Communications Ltd., the parent of India’s leading digital payments brand Paytm, plunged in Mumbai as a unit of Japan’s SoftBank Group Corp. lowered its stake in the company.
SoftBank’s SVF India Holdings (Cayman) Ltd. sold 29 million shares of Paytm at 555 rupees ($6.8) each, according to people familiar with the matter, raising 16.1 billion rupees. The trade -- equivalent to 4.5% of the Mumbai-listed firm’s equity capital -- pulled down shares 10%, their biggest slump since March 15.
Representatives for SoftBank and Paytm declined to comment on the pricing.
Norges Bank, Segantii Capital Management Ltd., Millennium Management LLC, LMR Partners and Ghisallo Capital Management LLC were buyers of SoftBank’s stake in Paytm, a person familiar with the matter told Bloomberg News, asking not to be named as the information is private. A media representative at Norges Bank declined to comment while rest of the companies didn’t respond to emailed queries.
Paytm is among a number of Indian startups that went public last year amid a boom in IPOs and zest for the country’s tech sector that have since suffered a slump in market value. When Paytm’s founder Vijay Shekhar Sharma pulled off the IPO last November, it was the largest in the Indian market up to that point.
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The company raised 183 billion rupees, but its shares went on to plummet in what would become one of the Indian bourse’s worst-ever debuts as investors shunned its high valuation and loss-making startup status. They are down about 75% from their IPO price.
Some early investors are making “desperate exits” as they grapple with the performance of their own funds amid a drop in global valuations, said Abhay Agarwal, a fund manager with Piper Serica Advisors Pvt.
SoftBank is one of Paytm’s biggest shareholders, along with Alibaba Group Holding Ltd. and its fintech affiliate Ant Group Co.
A representative for Paytm communicated earlier this year that the effective cost of SoftBank’s 17.47% stake in the company is 800 rupees per share. After this sale, it will hold roughly 12.9% of the company.
Other IPOs
SoftBank, the world’s biggest technology investor, has been grappling with declines on its portfolio of more than 400 investments in both public and private tech companies around the world. Its core Vision Fund segment posted a $7.2 billion loss in the July-September quarter, following a record 2.33 trillion yen ($17 billion) loss in the preceding period.
The lock-up period on $4.3 billion worth of Paytm shares expired on Tuesday, freeing investors to sell shares after they endured a year in which the company shed more than $12 billion of market value.
FSN E-Commerce Ventures Ltd., owner of beauty e-retailer Nykaa has seen selling by some holders, including private equity firm TPG Inc, since a lock-up on its shares ended last week.
Meanwhile, food-delivery company Zomato Ltd. plunged to a record low in July when a lock-up on its shares expired. Zomato’s successful IPO last year had set the tone for a generation of buoyant Indian unicorns to make their stock market debuts.
--With assistance from and .
(Update with stock prices in the second paragraph)
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