SoftBank makes loss of $544 million on Paytm; gains from PolicyBazaar, Zomato

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Japanese investment firm Softbank made a more-than-expected loss of $544 million while exiting from Paytm, though it offset part of that by making gains of $459 million on its exits from PolicyBazaar ($395 million) and Zomato ($65 million).

The investment firm’s financial results for Q1 (June quarter, 2024) showed that its investment cost in Paytm was $1.6 billion while the gross return was $1.06 billion. It had fully exited Paytm in the June quarter, after progressively selling chunks over the years. Since January this year, Paytm’s shares have been under pressure with the Reserve Bank of India imposing multiple restrictions on it.

The Masayoshi Son-controlled multinational global investment holding company is also sitting on gains with its other portfolio companies in India such as Delhivery at $285 million. In FirstCry, which is currently in IPO mode, the Japanese is reducing its stake in the offer for sale portion to 20 per cent from 25.2 per cent and is making a good profit of $70-76 million on its initial investment with its stake being worth around $695 million.

A major highlight of the quarter was that the firm made an overall investment gain of 559.7 billion yen ($3.8 billion) compared to loss of 699 billion yen ($4.75 billion) in the year-ago period. In addition, SoftBank Vision Fund’s performance turn positive.

It made investment gains of 32.4 billion yen at SoftBank Vision Funds, through which it makes investments in its portfolio companies. SVF1 had made gross gains since inception while SVF2 has made loss.

The firm has drastically reduced its exposure to China to 6 per cent at the end of June 2024 from 55 per cent as on June 30, 2020. The share of Japan has also reduced in that period to 10 per cent from 15 per cent, while the share of other APAC has doubled to 6 per cent.

Apart from Paytm, some of the other divestments during the quarter was that of T-Mobile to Deutsche Telekom for $670 million and Fortress share sold to Mubadla group.

SoftBank has stayed away from new investments in India over the past 18 months though it had indicated earlier this year that it was ready to resume funding.