SoftBank may sell shares of Zomato and Paytm to book gains as New-Age Stocks Surge
SoftBank, the Japanese investment conglomerate, aims to book profits by selling small stakes in Paytm and Zomato as the stocks of these new-age companies rally.
SoftBank, the Japanese investment Bank, is looking to capitalize on the recent surge in new-age stocks by planning profitable partial exits from Paytm's parent company, One97 Communications, and food aggregator Zomato. According to sources, SoftBank may sell small stakes in the two companies through open market transactions, rather than block deals.
SoftBank had initially invested in Zomato at around Rs 65-70 per share and in Paytm at Rs 830-840 per share. As of June 15, Paytm's share price had risen to Rs 900, while Zomato's share price stood at Rs 74.95. Both companies have experienced significant improvements in their financials, contributing to Paytm's nearly 70% surge and Zomato's 24% gain this year.
This marks a turning point for SoftBank, as it is set to sell shares at a profit for the first time since Paytm and Zomato went public in 2021. Previously, the Japanese investment bank had incurred losses on its investments. SoftBank currently holds an 11.17% stake in Paytm and a 3.4% stake in Zomato, as per data compiled by Moneycontrol.
The news of SoftBank's potential stake sale has affected the stock prices of One97 Communications, which fell 1.5% to Rs 878.50 per share on June 16. However, Zomato's stock opened 0.8% higher but later traded flat. SoftBank's move comes as it turns cautious and selective in its investments, refraining from participating in funding rounds in 2023. Nonetheless, the investment conglomerate seeks partial exits from its high-performing portfolio companies.
In May, SoftBank sold around a 2% stake in Paytm for $120 million. More recently, it partially divested its stake in Lenskart to private equity firm ChrysCapital, reportedly generating over $70 million from the sale.
SoftBank, known for its active involvement in India's startup ecosystem and backing more than 20 unicorns, remains focused on securing profitable exits from its investments. The company's strategy aligns with its cautious approach in the current market landscape.
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