SoftBank Unloads 2.2 pc Stake In Paytm Parent Company Amid Regulatory Uncertainty - Details

softbank unloads 2.2 pc stake in paytm parent company amid regulatory uncertainty – details

In a recent disclosure to the stock exchange, SoftBank Group confirmed the sale of a 2.2 per cent stake in One 97 Communications Ltd, the parent company of Paytm, between January 23 and February 26. According to The Economic Times report, this move saw the Japanese investment firm offloading a total of 1,37,84,787 shares in Paytm through the open market during the specified period.

On Tuesday, the shares of One 97 Communications were trading at Rs 390.50, a 3.87 per cent decline from the previous day’s closing.

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Following this transaction, SoftBank, operating through its affiliate SVF India Holdings (Cayman), now holds a reduced stake of 2.83 per cent in the company. The majority of the stake sale occurred prior to the Reserve Bank of India’s directive that prohibited Paytm Payments Bank from onboarding new customers and providing incremental banking services from March. This regulatory action was taken due to concerns regarding compliance with regulatory norms.

SoftBank cited growing uncertainty in India’s regulatory environment and concerns over Paytm Payments Bank’s license as key factors in their decision to sell. Navneet Govil, a representative of the global investment firm, emphasized the prudence of initiating monetization, stating that they were pleased to have divested a significant portion of their Paytm holdings before the recent stock correction.

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The report added that in February alone, shares of One 97 Communications experienced a substantial decline of over 48 per cent. The stock continued to display volatility, closing 3.4 per cent lower on Thursday at Rs 392.50 on the National Stock Exchange.

In response to regulatory challenges, the company recently announced the formation of a group advisory committee, chaired by former SEBI Chairman M Damodaran. This committee, comprising Damodaran, Mukund Manohar Chitale, and Ramachandran Rajaraman, will collaborate with the board to strengthen compliance and address regulatory matters. SoftBank’s stake in Paytm has witnessed a significant reduction over the past two years, declining from approximately 18.5 per cent during Paytm’s initial public offering in 2021.