SoftBank Group, based in Japan, has been gradually reducing its ownership stake in the Indian payments company Paytm, as indicated by an exchange filing on Thursday.
According to the filing, the investment firm's stake has been reduced to just 2.83 percent, down from its previous holding of 5.01 percent. This marks a consistent decline in SoftBank's ownership, which stood at 17.5 percent in September 2022.
SoftBank has been progressively decreasing its stake through multiple open market transactions over the past year, with the most recent reduction occurring in January.
On January 24, 2024, the Japanese firm announced another 2 percent reduction in its stake in One 97 Communications, the parent company of Paytm, bringing its overall ownership to approximately 5 percent.
This ongoing divestment from the troubled payment firm aligns with Softbank's reported strategy to exit its investment in the fintech company, as per media reports.
Several prominent global investors, including Warren Buffett's Berkshire Hathaway and China's Alibaba Group, divested their positions in Paytm in 2023, while others, such as a Netherlands-based unit of Chinese fintech giant Ant Financial, also trimmed their holdings.
Reportedly, SoftBank significantly reduced its holdings in Paytm before regulatory scrutiny, which subsequently led to a decline in the fintech firm's share value.
Recent developments within One 97 Communications have compounded the company's challenges. Vijay Shekhar Sharma, the founder, recently resigned from his role as part-time non-executive chairman and board member at Paytm Payments Bank Ltd (PPBL), an associate entity of Paytm.
Furthermore, all of Paytm's nominees were withdrawn from PPBL's board. Following compliance issues, PPBL faced regulatory restrictions at the end of January and has since appointed new board members, including former officials from the Central Bank of India, retired IAS officers, and a former executive director of the Bank of Baroda.
In afternoon trading, Paytm shares experienced a nearly 4 percent decline, settling at Rs 390.05.
Since the Reserve Bank of India directed the company to close its financial arm on January 31 due to continued regulatory non-compliance, Paytm's stock has plummeted by 48.5 percent, resulting in an approximate loss of Rs 23,400 crore ($2.8 billion) in value.
