SoftBank’s India Portfolio A Mixed Bag; Delhivery Adds To Profit, Paytm In Red

After three disastrous quarters, Japanese tech investor SoftBank finally reported positive numbers with a net profit of 3.03 Tn Yen ($21.77 Bn) in the quarter ended September 2022. 

The reversal of fortunes came on the back of a heavy windfall from the 37 Tn Yen ($37 Bn) gains made from early settlement of prepaid forward contracts of Alibaba’s shares.

The tech investor’s India portfolio turned up a mixed bag, with fintech major Paytm being the worst performer among the Indian startups, while logistics player Delhivery emerged as a winner for the Masyoshi Son-led firm.

Backed by Vision Fund 1, Paytm contributed $500 Mn loss to SoftBanks’ kitty as of September 30, 2022. It has so far invested $1.4 Bn in the fintech player, the value of which stood at $900 Mn at the end of the quarter. 

Despite its shares plummeting on the exchanges, Zomato’s valuation stayed steady. SoftBank said that its investment of $200 Mn in the startup contributed zero to SoftBank’s gross profit. 

PB Fintech, the parent company of insurtech startup Policybazaar, also saw an upward movement as the investor pegged its stake in the startup at a valuation of $300 Mn against an investment of $200 Mn. 

The biggest winner for SoftBank came in the form of the logistics startup Delhivery. The investor pumped in $400 Mn in the startup, which listed on the Indian stock exchanges earlier this year, which ballooned to $1 Bn, a 2.5X increase. 

The India Portfolio

SoftBank’s Vision Fund 1 portfolio includes a total of 78 companies, of which 22 are publicly listed. Of these, India accounts for four public companies, apart from other privately-held startups. 

The Japanese tech investment firm has also invested in major Indian startups such as Globalbees, OYO, Ola, Flipkart, Meesho, and Lenskart. 

Interestingly, a majority of its portfolio companies have been getting pummeled due to adverse market conditions. 

Publicly-listed portfolio companies such as Paytm and Policybazaar have seen their share prices tank by more than 23% and 31% in the past three months. Zomato shares hit their all-time low in the second quarter as Blinkit acquisition weighed heavily on the foodtech major. However, the stock has recovered a bit since then. 

It is pertinent to note that SoftBank held a stake in Blinkit as well which it swapped for Zomato’;s shares during the acquisition.

Shares of Delhivery have also come under pressure. Even as the shares hit their all-time high in July, it was followed by a record low in October. From their record high, shares of Delhivery have plummeted more than 46% in just four months, wiping billions of dollars in investor wealth.

Meanwhile, ecommerce rollup startup GlobalBees posted a consolidated loss of INR 40.9 Cr in FY22, while Cars24’s standalone loss stood at INR 175.5 Cr in FY21.

On similar lines, OYO continues to post losses (INR 1,940 Cr in FY22), even as hotels open up and the domestic travel market recovers from the after-effects of the pandemic. Earlier this year, SoftBank also slashed the valuation of its stake in the hospitality major by 20%.

Overall, the fair value of SoftBank’s India portfolio stood at $13 Bn as of September 30, 2022 and was 9% of the fair value of companies in its global portfolio.

At SoftBank’s previous quarter’s earnings call, Son had warned that the ongoing funding winter would last longer for unicorns unwilling to accept a lower valuation to raise funds.

Meanwhile, funding numbers for Indian startups continue to decline. This has ignited fears that the funding raised by Indian startups could fall to pre-2020 levels. 

According to Inc42, Indian startups raised a mere $1.3 Bn in funding in October this year, a drastic fall of 77% compared to the corresponding month last year. Just three startups – BYJU’S, Ecom Express and Udaan – accounted for 41%, or $537 Mn, of the total funding raised in October. 

Besides, many Indian startups have also resorted to layoffs to cut expenses and increase runway. As per Inc42’s layoff tracker, more than 15,700 employees have been shown the door by startups since the beginning of this year, while tens of companies have wound up operations altogether.