The move by global technology (tech) investors stoked fears that it may look to sell shares in other Indian tech firms, such as PB Fintech (PolicyBazaar) and Delhivery, where the lock-in has just ended. Shares of Paytm dropped 10 per cent to close at Rs 540, with a decline of 10 per cent over its previous day’s close. Shares of logistics firm Delhivery, online insurance marketplace PolicyBazaar, and restaurant aggregator Zomato — where SoftBank has substantial holdings — also finished lower.
The valuations of Zomato, Paytm, Nykaa, PolicyBazaar, and Delhivery have seen a cumulative wealth erosion of Rs 3.1 trillion from their respective peaks. These five stocks are down between 50 per cent and 75 per cent from their highs amid a double whammy in the form of supply of excess shares in the market and uncertainty around their road to profitability.
Notwithstanding sharp declines after listing, many pre-initial public offering (IPO) investors are still sitting on healthy gains.
Experts say the start-up shares could continue to remain under pressure on fears that there will be a deluge of paper in the market from pre-IPO investors.
“Until last year, start-ups were getting investments for cash burn. Now investors want to back only those companies that are producing free cash flows. The harsh reality is hurting everyone after the stimulus era ended. These companies will have to demonstrate they are ready to generate profits. Only then will they find wider acceptance,” said Deven Choksey, managing director, KRChoksey, a broking firm.
SoftBank firm SVF India Holdings (Cayman) offloaded 29.4 million shares (4.5 per cent stake) of Paytm at Rs 555.67 via block deals for a total of Rs 1,631 crore on Thursday. Among buyers were BofA Securities, Morgan Stanley, and Société Générale, revealed data.
SoftBank holds close to 18.5 per cent stake in Delhivery, 10.2 per cent stake in PolicyBazaar, and about 3.4 per cent in Zomato. In the case of Delhivery, the post-IPO lock-in was for a period of six months, which ends on November 20, while the one-year lock-in in the case of PolicyBazaar has just ended.
The trend of investors making a dash to sell after the end of the lock-in period has been seen in almost all companies, starting with Zomato in July. Uber, Moore Strategic Ventures, and Tiger Global sold their shares within days of the end of the lock-in period in the case of Zomato.
Earlier this week, investors, including Lighthouse India Fund, Segantii India, and a few wealthy individuals, such as Mala Gaonkar, sold their shares in beauty retailer Nykaa. In the case of PolicyBazaar, Tiger Global has offloaded shares worth over Rs 500 crore.
Shares of PolicyBazaar hit their lowest levels after listing at Rs 356 on Thursday. Nykaa and Delhivery, too, fell near their record lows at Rs 171 and Rs 367 in intraday trade.
“There are a total of 598.16 million shares currently locked in and will be available for trading on November 20 in Delhivery. All pre-IPO investors have bought their shares at less than Rs 200 per share, so they are still sitting on nearly double their investment at the very least,” said analyst Brian Freitas of Periscope Analytics, who publishes on Smartkarma, in a note on November 9.
 "pre-IPO investors")