SoftBank Earns $1.8-1.9 Billion Through Selling Stakes in Four Indian Startups

• ByStartupStory     |    January 2, 2024

SoftBank, having refrained from engaging in fresh startup funding deals in India lately and poised to sell stakes in IPO-bound companies like Ola Electric and FirstCry, retains shares worth $1.1-1.2 billion in its listed portfolio firms in the country. The Japanese investor has divested shares totaling $1.8-1.9 billion through public offerings and post-listing sales in four Indian startups – Paytm, Zomato, PB Fintech, and Delhivery – which went public between 2021 and 2022, out of the total $2.3-2.4 billion invested in these companies.

SoftBank’s approach of diluting its holdings through secondary sales while refraining from new investments aligns with the strategy of many growth and late-stage investors, who have curtailed their investment activities over the past 15-18 months. The conglomerate, which has supported nearly a fifth of India’s 100+ unicorns (startups valued above $1 billion), has injected $15 billion into the Indian market. Out of this, SoftBank Vision Fund contributed $11 billion, while the remaining $4 billion was allocated to sectors like renewable energy and infrastructure.

The investor holds substantial stakes in Ola Electric and FirstCry, with respective estimated valuations of $1.4-1.6 billion and $840-850 million post-IPO. SoftBank aims to sell about $45-50 million in Ola Electric (0.65% stake) and approximately $180 million in FirstCry (about 4.5% stake) upon their public offerings.

SoftBank’s investment trajectory in Paytm has experienced challenges, with the company’s stock trading nearly 70% lower than its IPO price. Although the investor has realized returns of $800-900 million from its $1.6 billion investment in Paytm, it still retains shares valued at $550 million based on the current stock price.

Additionally, SoftBank has gained substantial returns from PB Fintech, recovering around three to three-and-a-half times its $200 million investment by divesting stakes worth $650 million and retaining shares valued at $130 million. The investor has also profited from Zomato, earning $340 million through stake sales after acquiring a position in the company via its investment in Blinkit.

Regarding Delhivery, where SoftBank maintains a 12% stake, the investor has secured $200 million from reducing its holdings and still holds shares valued at $400-450 million. Beyond the listed space, SoftBank previously divested its stake in Flipkart to Walmart for $4 billion in 2018, following a $2.5 billion investment in the ecommerce platform. However, in 2021, SoftBank rejoined Flipkart’s funding round with a $3.6 billion investment through SoftBank Vision Fund-II.

Moreover, SoftBank executed a secondary stake sale in Lenskart during the eyewear retailer’s $600 million funding round, gaining an estimated $90-100 million from the transaction. SoftBank’s executive managing partner and chief financial officer, Navneet Govil, mentioned to ET in August that several portfolio firms, including Swiggy, OfBusiness, and Lenskart, were gearing up for IPOs.

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