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SoftBank Offloads $120 Million Worth Stakes In Paytm To Follow SEBI Guidelines

SoftBank, the Japanese technology investor, sells approximately 2.07 per cent of its stakes in the parent organization of Paytm, One97 Communications Ltd. so as to adhere to the SEBI Takeover Regulations.

A SoftBank arm, SVF India Holdings, sold shares adding up to 13,103,148 from 10 February 2023 to 8 May 2023, that constitutes about 2 per cent of the gross shareholding.

The multinational holding company did not lay down any comments on this occurrence, and the regulatory filings also did not mention the overall market valuation of the sale.

SoftBank Sells 2% Stake in Paytm Worth $120 Million - Equitypandit

However, the deal that brings down the stakes of SoftBank in Paytm to 11.17 per cent from 13.24 per cent, resulting in 70,809,082 shares, has a gross valuation of around 120 million dollars.

A total of 13,103,148 equity shares pertaining to One97 Communications were disposed of by SVF India Holdings (Cayman) Limited in a series of open market transactions.

The Securities and Exchange Board of India (SEBI), the commodity and securities market regulator, introduced the Substantial Acquisition of Shares and Takeovers Regulations to monitor the accretion of voting rights and shares in Public Listed Companies of India.

The disposal of shares by the SoftBank entity on 8 May 2023 breached the 2 per cent threshold specified in the SEBI Takeover Regulation 29 (2).

SoftBank offloads 2% stake in Paytm in a series of disposals since February | Business News,The Indian Express

About 4.5 per cent stakes in Paytm were previously sold out at a valuation of Rs. 1631 crores by the Japanese conglomerate in November 2022 through an open market transaction.

In order to comply with the SEBI norms, one more stakeholder of Paytm, the Ant Group, is also planning to slash out some of its stake from the Noida based fintech company through a secondary block transaction. Yet, it is the largest stakeholder in Vijay Shekhar Sharma-owned Paytm, with around 25 per cent investment.

The Alibaba group from China also offloaded stakes of 3.3 per cent worth Rs. 1378 crore earlier in February.  On the contrary, the investment banking company, Goldman Sachs restated Buy ration (on Conviction List) this month on Paytm stock, while Macquire has maintained a rating of Outperformed.

SoftBank, as well as the affiliate of the Alibaba, the Ant Group are in plans to exit Paytm, and are therefore gradually selling their shares in the market.

Paytm had witnessed an investment of around 1.6 billion dollar by SoftBank in the fourth quarter of 2017, while 220 million dollar worth shares were sold out by the investment firm at its Initial Public Offering (IPO).

The past few months witnessed quite a few divestments from SoftBank, including the parent firm of PolicyBazaar, PB Fintech, with a sale of 5 per cent of its equity. NSE showed the block deal to be worth Rs. 1043 crore.

Paytm shares fall 3% after SoftBank trims stake

On the other hand, Paytm is going through a sea-saw phase of profit and loss. Last year, the fourth quarter noted a loss of Rs. 761.4 crore, whereas in the financial year 2023 the consolidated loss narrowed down to Rs. 168.4 crore.

From the operations end, Paytm registered a growth of 13.2 per cent in FY23 third quarter from Rs. 2062.2 crore, compared to its progress from Rs. 1540.9 crore in FY 2022 fourth quarter of 51.5 per cent. Howbeit, the revenue in Q4 of FY23 rebounded profitably to Rs. 2334.5 crore.

The primary growth driver of the fintech firm that is Distribution of Financial Services and Digital Payments has become its core revenue, along with disciplined resource allocation.

After the Q4 results, the Founder and CEO of Paytm, declared that the company’s next big milestone is aimed on making it cash flow positive.  Paytm CEO owned a stake of 91.3 per cent in the fintech company, that does not have promoter entity.

The current share price of Paytm puts forward a demanding entry point into the most profitable and the largest fintech companies in India.

Pay through mobile or Paytm was founded in 2010 and over 30 crore Indians trust its payment services, that led it to top it to the No. 1 position in the e-commerce and payments platform.

Proofread & Published By Naveenika Chauhan



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