Foreseeing regulatory uncertainty, SoftBank sold Paytm stake before share plunge: report

Foreseeing regulatory uncertainty, SoftBank sold Paytm stake before share plunge: report

FILE PHOTO: A Paytm QR code is seen at a grocery shop in Mumbai, India, November 10, 2021. REUTERS/Niharika Kulkarni

SoftBank Group Corp. sold a majority of its stake in India’s Paytm before regulatory scrutiny by the central bank caused the firm’s shares to slump, Bloomberg reported on Thursday quoting Vision Fund’s executive managing partner.

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

“We felt it was prudent to start monetising,” the Vision Fund’s finance chief said. “We’re glad we did a good portion of Paytm before the recent stock correction.”

SoftBank Group sold an additional 2% of Paytm between Dec. 19 and Jan. 20 and holds a 5.06% stake in the company, according to an exchange filing on Jan 24. This compares with a roughly 18.5% stake around the time of the Indian payments company’s initial public offering in 2021.

Earlier this week, the central bank barred Paytm Payments Bank from accepting deposits in both its accounts and digital wallets. It said that an audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliance and continued material supervisory concerns in Paytm Payments Bank (PPBL), directing it to bar key services such as depositing money in PPBL accounts, top-ups in Paytm Wallet, FASTags and more.

The company’s shares slumped 20%, hitting the lower circuit on Thursday, after the announcement from the Reserve Bank of India.

Paytm’s shares debuted on the bourses at a 9% discount to its IPO price of Rs 2,150 per share in 2021 and hit the lower circuit on listing day itself. Even after two years, the stock has not fully recovered from the dramatic descent.

Recently, other investors in Paytm have also either trimmed their stake or exited the firm. This includes the exit of Warren Buffett’s Berkshire Hathaway and China’s Alibaba Group. The Netherlands-based unit of Chinese fintech firm Ant Group has also cut its stake in the firm.

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