Softbank to divest 29 mn shares in Paytm via block deals on Thursday

Floor price set at Rs 555, 8% discount to last close

SoftBank plans to offload 29 million shares in One97 Communications, which operates India’s largest payments platform Paytm. The global tech investor is offering shares in the range of Rs 555-Rs 601.45 via block deals which will get executed on Thursday. The floor price for the share sale is nearly 8 per cent lower than Paytm’s last closing price of Rs 601.6. The share sale comes close on the heels of the end of one-year post-IPO lock up period on Paytm shares. Shares of Paytm declined nearly 4 per cent on Wednesday.

Currently, SoftBank Vision Fund (SVF) holds around 113 million, or 17.45 per cent stake, in Paytm. Following the share sale, its stake will decline to around 13.1 per cent. At the lower end, SVF will be able to mop up Rs 1,610 crore—similar to the amount it raised by selling shares in Paytm’s IPO. However, in the IPO it sold shares at Rs 2,150 apiece. Currently, Paytm shares are 72 per cent below its IPO price.

As per Paytm’s offer document, the average cost of acquisition per share for SVF works out to Rs 1,820.2 per share, 66 per cent below the current market rate.

Softbank is among marquee shareholders of Paytm. Others include Ant Financial Services Group, Alibaba Group, SAIF Partners and Berkshire Hathaway. At the end of September 2022 quarter, Ant held 24.88 per cent stake in Paytm, Alibaba 6.2 per cent, SAIF 15.09 per cent and Berkshire 2.41 per cent.

All eyes are on whether these shareholders, too, will make a dash towards exit with the lock up period ending and uncertainty remaining over when Paytm will turn profitable.

Unlike Softbank, not all shareholders are currently under water. The cost of acquisition for Alibaba is around Rs 583 per share, as per the DRHP, while that for Antfin and Berkshire is Rs 1,833 and Rs 1,280 per share.

Paytm came out with a Rs 18,300 crore IPO in November 2021. It was the largest-ever IPO to hit the domestic markets back then and currently is the second-largest after state-owned LIC. It consisted of a fresh fund raise of Rs 8,300 crore and the rest was secondary share sale by investors by a clutch of investors including Softbank, Ant and Mountain Capital Fund.