Paytm Shares Plunge Over 10% After SoftBank’s 4.5% Stake Sell

SUMMARY

SoftBank Group sold 2.9 Cr shares of Paytm for INR 1,630.9 Cr in a bulk deal on Thursday

BofA Securities Europe, Morgan Stanley Asia, and Societe Generale ODI purchased about 2 Cr shares of Paytm at INR 555 apiece

Most of the brokerages expect the expiry of the lock-in period for Paytm’s pre-IPO investors on November 18 to create further selling pressure

SoftBank Group on Thursday (November 17) sold 2.9 Cr shares, or 4.5% stake, of fintech giant Paytm for INR 1,630.9 Cr (approximately $200 Mn) in a bulk deal as the company’s lock-in expiry comes to an end.

Paytm shares traded with historically highest volumes of 43 Lakh on the BSE and ended 10.3% lower at INR 539.55 today.

SoftBank sold the shares at INR 555.67 apiece. SoftBank’s Vision Fund was the second-largest shareholder of Paytm after Antfin, holding a 24.88% stake in the company.

While several reports have cited November 15 as the lock-in expiry for Paytm, a company spokesperson told Inc42 that it is due on November 18.

As on September 2022, SoftBank Group held a 17.45% stake, or over 11 Cr shares, in Paytm. These shares were under lock-in.

It is pertinent to note that SoftBank, while reporting its results for the September quarter of 2022, said that Paytm contributed $500 Mn gross loss to the fund, as of September 30. The Japanese investor said that it has made an investment of $1.4 Bn in Paytm so far.

As per a Reuters report, the shares sold by SoftBank were bought largely by hedge funds, including Millennium Capital, Ghisallo Capital Management, Segantii Capital Management, and other buyers such as Norges Bank and Norway’s central bank.

According to the NSE’s bulk deal data, BofA Securities Europe, Morgan Stanley Asia, and Societe Generale ODI purchased about 2 Cr shares of Paytm at INR 555 apiece.

Earlier, most brokerages had pointed out the lock-in expiry as a near-term headwind for Paytm. “… lock-in expiry for pre-IPO shareholder (holding 85%+ stake) is due on 18Nov’22 will be a key near-term overhang,” JM Financial said in a note.

Paytm shares are currently trading 72.3% lower on the BSE compared to its listing price on the Indian stock exchange on November 18 last year.

The loss reported by the company quarter after quarter has created further pressure on the stock. Earlier this month, Paytm reported a 21% rise in its net loss to INR 571 Cr in Q2 FY23 from INR 474 Cr in Q2 FY22.

Kush Ghodasara, CMT, independent market expert, earlier told Inc42 that Paytm has spent a lot of money on marketing ancillary services and they are not getting good responses in any of those sectors as expected. “This is going to affect Paytm in the long term and I think it will hit more after the lock-in expiry,” he said.