Japan based, SoftBank Group Corp, have cut down their investment in Paytm’s parent company, One97 Communications. The investment now stands at USD 800 Mn amidst the stock taking a beating after it was listed in November, 2021. SoftBank met with a historic loss of USD 26.5 Bn in its two Vision Funds for the year that ended in March 2022.
The Japanese conglomerate, headed by its CEO, Masayoshi Son, invested USD 1.4 Bn in Paytm’s parent company, One97 Communication. The investment was made through its SoftBank Vision Fund 1. Present fair value of the fund stands at USD 800 Mn as on March 31, 2022.
However, SoftBank is still in the gains with respect to its investment in PolicyBazaar’s parent company, PB Fintech Ltd. The current fair value of of the investment stands at USD 400 Mn compared to the investment cost of USD 100 Mn made by SoftBank Vision Fund 1.
Paytm was listed at an IPO price of INR 2,150 in November, 2021. Paytm recorded market capitalisation of USD 18.6 Bn (INR 1.4 TN) which later plunged by 76 percent to INR 520 on March 23 with market capitalisation of USD 4.33 Bn (INR 33, 443 Cr).
PolicyBazaar saw a successful beginning on the stock exchanges yet its market cap eroded this year due to the hammering new-age companies have undergone amidst geopolitical concerns and constant fear of hikes in interest rates by the Federal Reserve.
Paytm wasn’t alone in SoftBank Vision Fund 1’s list of companies whose fair value was priced below the investment cost. Ten other companies listed in the fund’s portfolio lost their fair value. SoftBank Vision Fund invested USD 12.1 Bn in Chinese ride-hailing group, Didi Chuxing which plunged over five times and stood at a fair value of USD 2.4 Bn. Office-sharing firm, WeWork’s fair value dipped from USD 2.4 Bn to USD 300 Mn too.
Some companies saved SoftBank’s day with a fair value higher than the investment cost. Coupang’s fair value rose to USD 8.2 Bn from the investment amount of USD 2.2 Bn. SoftBank’s investment in Uber grew from the investment cost of USD 2.1 Bn to the present fair value of USD 2.2 Bn.
SoftBank’s Vision Funds did poorly in the year ended March 31, 2022 with a gigantic loss of USD 26.5 Bn.
Unrealised loss on valuation (net) amounted to 2922.3 Bn Yen of SoftBank’s Vision Fund 1’s portfolio. This was due to a plunge in share prices of most of the companies that were listed. Multiple factors drove the decline in share prices including regulatory tightening, and the general avoidance of high-growth technology stocks in anticipation of higher interest rates, the company said. Escalation in fair value of unlisted portfolio companies was slow-moving due to the same, the company said.
Vision Funds are managed by SBIA, a fully-owned UK based subsidiary of the company. The Vision Funds have an estimated 450 companies.
SoftBank Vision Fund 1 invested a totalled amount of USD 3.33 Bn during the fiscal year under review. The Fund stood at 82 investment, with 22 in listed portfolio companies, as on March 31, 2022. SoftBank Vision Fund 2 made progressive new investments of USD 40.82 Bn in the fiscal year, scaling the total investment cost of the fund to USD 47.54 Bn. The second Fund stood at 250 investment with 14 listed portfolio companies as on March 31, 2022.
SoftBank, in previous year, invested in Indian startups including enterprise software startup, Whatfix and payments technology startup JusPay Technologies.
In November last year, SoftBank Investment Advisers’ CEO, Rajeev Mishra, stated that the company has deployed USD 3 Bn in 2021 and is looking to invest nearly USD 5-10 Bn this year.