Paytm crashes almost 10% after investor SoftBank dumps stock in block deal

 one97 Communications, the parent company of Paytm crashed on Thursday after shareholder SoftBank reportedly dumped 29.5 million shares of the payments company in a block deal on Thursday.

At 10.53 am, Paytm stock was seen trading at Rs 545.45, down 9.31% on the National Stock Exchange (NSE) on Thursday. The stock closed at Rs 601.45 per share on Wednesday.

The payments company now trades close to its 52-week-low level of Rs 510.05, to which the stock plunged on May 12, 2022.

SoftBank reportedly sold as many as 29.5 million shares accounting for 4.5% of the Vijay Shekhar Sharma-helmed company in a single block deal on Thursday, leading to the biggest crash in stock price since July 29.

As of September 30, Softbank held a 17.45% of stake in the fintech company through SVF India Holdings. After the sale, the stake is likely to be reduced to 12.9%.

According to reports, the price range of the deal, managed by BofA Securities, was set at Rs 555-601, with lower end of the price at a 7.7% discount to Wednesday’s closing price of Rs 601.45 on the NSE. The deal is likely to fetch Rs 1,628.90 crore or $200 million for SoftBank.

The Japanese investor had invested $1.6 billion in Paytm and sold shares worth $220-250 million during the IPO. It is to be noted that Paytm stock, which was issued at Rs 2,150 has lost 72% of value since, heavily eroding SoftBank’s investment in the company.

The timing of the sale matches the end of the one-year lock-in period for anchor investors, who buy shares ahead of IPO. The stock of newly-listed companies becomes volatile when the lock-in period ends as institutional investors, who are not allowed to exit the share during the said lock-in, tend to book gains or losses once the restrictions are lifted.

Paytm’s listing, which was received with much fanfare and went to become India’s second biggest IPO, has also turned out of the one of the biggest disappointments for its investors.