By
Chimamanda U. Martha
March 28th, 2024
SoftBank & Ant Group previously offered to sell their Paytm stakes to Bharti Airtel founder-chairman Sunil Mittal.
Japan’s SoftBank Group Corp and China’s Ant Group currently seek to offload their stakes in Indian digital payments firm Paytm. According to reports, the duo is discussing the secondary sale of said stakes in the open market.
SoftBank and Ant earlier approached Bharti Airtel founder-chairman Sunil Mittal regarding the Paytm stakes sale. However, those discussions fell through, with Bharti no longer involved in conversations to buy into Paytm’s parent, One 97 Communications. SoftBank and Ant, intent on reducing their holdings in Paytm, also unsuccessfully tried to sell to another Indian conglomerate.
The Economic Times reported that an open market sale to financial investors through a block deal remains possible. Meanwhile, Paytm’s management opposes the idea of a strategic investor coming into the company.
Nonetheless, inside sources said that SoftBank and Ant would sell shares gradually in the market over a period. This development would be part of the duo’s broader plans to exit Paytm.
SoftBank & Ant Planned Paytm Stakes Sale Caps Dismal Run for Digital Payments Platform
Since its gloomy listing in late 2021, Paytm has faced pressure to turn profitable. The digital payments firm’s shares are at a massive 70% drawdown from their IPO price of 2,150 rupees. In addition, the sustained downturn in tech valuations last year further dampened Paytm’s already bleak profitability prospects. A spokesperson for the company addressed the sales development in an email that read:
“We do not comment on speculations. However, we can confirm that our focus remains on building a sustainable and profitable business for the long term and creating value for all our stakeholders. We are not involved in any such discussions.”
Although Alibaba recently exited Paytm, Ant Group remains the firm’s largest shareholder with a 25% stake. Meanwhile, Japanese investment management giant SoftBank owns around 13% of Paytm, while tech investor Elevation Capital owns 15%.
SoftBank previously offloaded a 4.5% stake in Paytm through block deals for roughly $200 million. The Tokyo-based conglomerate holding company also suffered from the devaluation of 2022’s global tech market.
Jack Ma-backed Ant has a 90-day window to reduce its Paytm stake following the buyback completion on February 13th. Meanwhile, a report by Macquarie from last November stated that Paytm would be at risk following a Reliance Industries announcement. At the time, the Mumbai-based Indian multinational conglomerate announced plans to spin off to list its financial services unit. According to Reliance, the move was necessary to secure more significant opportunities in the consumer-centric business.
The report by research firm Macquarie read:
“RIL has demonstrated its hunger for attaining scale in the past in other businesses, and in our view, can pose a significant growth and market-share risk for players like Bajaj Finance and Paytm with whom it could be competing head-on.”
Tech Optimism
Despite last year’s tech downswing, optimism remains high that another boom phase will occur sooner or later. This optimism reflects heavily in recent reports that VC mainstays Sequoia and Andreessen Horowitz have invested heavily in the sector.