SoftBank marks down investment in Paytm parent to $800 Mn
- ByStartupStory | August 9, 2022
SoftBank Group Corp has reduced its investment in One97 Communications, the parent company of Paytm, to $800 million, while reporting a historic loss of $26.5 billion at its Vision Funds for the fiscal year ending March 2022. Through its Softbank Vision Fund 1, the Japanese company invested $1.4 billion in Paytm. According to the study, the fund’s fair value is $800 million as of March 31, 2022. However, it still has a stake in another Indian fintech business, PB Fintech Ltd, which owns the insurance aggregator Policybazaar, which was also floated last year. Softbank Vision Fund 1 invested $100 million in Policybazaar, and its fair value has increased fourfold to $400 million.
Since its IPO in November last year at an IPO price of Rs 2,150, Paytm’s the stock has taken a beating in the capital markets. Paytm had a market valuation of roughly Rs 1.4 trillion ($18.6 billion) at the time of its IPO, which has now dropped to ₹ 33,443 crores ($4.33 billion) at Thursday’s closing price of Rs. 515.65 per share. Despite a strong start on the stock markets, Policybazaar has seen much of its market capitalization erode this year, in keeping with the battering new-age firms have taken amid geopolitical uncertainty and fears of Federal Reserve interest rate rises.
Paytm was not the only worldwide listed firm from Softbank Vision Fund 1 that lost its fair value. Apart from Paytm, the fair value of 10 other firms, or half of the fund’s listed portfolio, was priced below the investment cost. Softbank Vision Fund 1’s fair market value in Chinese ride-hailing company Didi Chuxing was reduced by more than five times to $2.4 billion from its initial cost of $12.1 billion, while its fair value in office sharing business WeWork was reduced by $600 million from $3.2 billion. The fair worth of several of the fund’s listed firms was more than the investment cost. They include Coupang, which has a fair worth of $8.2 billion vs an investment cost of $2.2 billion.
The Vision Funds, which are managed by SBIA, a completely owned subsidiary of the corporation founded in the UK, include around 450 companies. During the fiscal year under consideration, Softbank Vision Fund 1 invested a total of $3.33 billion. As of March 31, 2022, it had 82 interests, including 22 listed portfolio firms. Softbank Vision Fund 2 invested a total of $40.82 billion in new and follow-on investments in the fiscal year, increasing the fund’s total investment cost to $47.54 billion. At the end of the fiscal year, the second vision fund had 250 investments, including 14 publicly traded portfolio firms.
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