Paytm Shares Tank 10% On SoftBank Stake Sale Report; Key Details for Investors

Paytm Share Price Today: One 97 Communications (Paytm) dropped as much as 10 per cent to its lowest since May. This comes after Reuters reported that SoftBank Group Corp will sell 2.9 crore shares worth up to 4.5 per cent, of Paytm through a block deal on Thursday (17 November 2022). The price range for the sale has been set at Rs 555-601. The sale will likely fetch SoftBank at least Rs 1,628.9 crore ($200 million).

The lower end of the price band is a 7.74 per cent discount to Wednesday’s close price of Rs 601.55 on the BSE.

The sale follows the end of one-year mandatory lock-in for pre-IPO investors in Paytm. The stock entered the bourses on 18 November 2021. It was listed at Rs 1955, a discount of 9.07 per cent compared with the initial public offer (IPO) price of Rs 2150. The IPO of Paytm was subscribed 1.89 times. The issue opened for bidding on 8 November and it closed on 10 November. The price band of the IPO was fixed at Rs 2080 to Rs 2150 per share.

As of 30 September 2022, SoftBank held a 17.45 per cent stake in Paytm through SVF India Holdings (Cayman).

SoftBank had invested $1.6 billion in Paytm and had sold a partial stake worth $220-250 million in the IPO last year.

One 97 Communications is a digital financial services firm that operates under the Paytm brand. Paytm is India’s payment super app offering consumers and merchants comprehensive payment services.

The sale is the latest in a string of divestments that SoftBank has made in the past few months, after its flagship Vision Fund unit booked nearly $50 billion in losses in just six months.

Paytm had made its stock market debut on November 18 last year. The stock is trading 70 per cent below its IPO issue price of Rs 2150. The 52-week range of the scrip is Rs 1,955 and Rs 510.05.

What Should Investors Do?

Girish Sodani, Head of Equity Market at Swastika Investmart Ltd., said: “Today shares of One 97 Communications Ltd (Paytm) collapsed about 10 per cent to Rs 541 on the BSE in the market. In a block deal, a unit of Japan’s SoftBank Group Corp cut its stake in the company. About 29.5 million shares, the equivalent of 4.5 per cent of the company’s equity capital. SoftBank will sell a third of its stake in paytm. Paytm shares made their stock market debut in November last year Stock is down about 70 per cent from its IPO price of Rs 2,150. The lock-in period for pre-IPO investors of Paytm expired on November 15. According to data from both Exchanges, the total trading volume in Paytm’s shares stood at a little over 47 million as of 10 am today but Paytm’s CEO Vijay Shekhar Sharma in a letter to shareholders earlier this week said that the company is on the right path to profitability and free cash flows, after its recent quarterly reports which showed strong operating leverage and reduction in EBITDA losses. As its Qtr number suggests consolidated revenue from operations increased by about 76 per cent to Rs 1,914 crore.”

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