SoftBank Group Corp has marked down its investment in Paytm parent One97 Communications to $800 million, even as it reported a historic loss of $26.5 billion at its Vision Funds for the fiscal ended March 2022, according to its latest financial report released on Thursday.
The Japanese conglomerate invested $1.4 billion in Paytm via its Softbank Vision Fund 1. The fund's fair value is marked at $800 million as on March 31, 2022, the report showed.
However, it is still in the money with respect to its stake in another Indian fintech company PB Fintech Ltd, which operates insurance aggregator Policybazaar that also was listed last year. Softbank Vision Fund 1 invested $100 million in Policybazaar and its fair value has jumped 4x of the investment cost at $400 million.
Paytm’s stock has taken a hammering in the capital markets since it got listed on the bourses in November last year at an IPO price of Rs 2,150. At the IPO price, Paytm had a market capitalization of nearly Rs 1.4 trillion ($18.6 billion), which has since reduced to Rs 33,443 crore ($4.33 billion) at Thursday's closing price of Rs 515.65 per share. Policybazaar despite having a good beginning on the stock exchanges has also seen much of its market cap erode this year in line with the beating new-age companies have been subjected to amid geopolitical uncertainties and fear of interest rate hikes by the Federal Reserve.
Paytm was not the only company from Softbank Vision Fund 1's global listed companies that lost its fair value. Apart from Paytm, 10 other companies or half of the fund's listed portfolio had their fair value priced below the investment cost.
For instance, Softbank Vision Fund 1's fair value in Chinese ride-hailing group Didi Chuxing was down more than five times to $2.4 billion from its investment cost of $12.1 billion and in office sharing firm WeWork down to $600 million from $3.2 billion.
On the bright side, the fund's fair value in some of its listed companies was higher than the investment cost. They include Coupang with fair value at $8.2 billion as compared to the investment cost of $2.2 billion. Its fair value in Uber was also higher at $2.2 billion versus the investment cost of $2.1 billion.
Overall, Softbank's Vision Funds -- SoftBank Vision Fund 1 and SoftBank Vision Fund 2 -- had a poor showing in the last fiscal ended March 31, 2022.
The Vision Funds posted a historic loss of 3434.7 billion yen (around $26.5 billion).
Unrealized loss on valuation (net) totaled 2,922.3 billion yen of the Softbank Vision Fund 1 portfolio mainly due to a decline in the share prices of most listed companies, the report noted. The fall in share prices was caused by multiple factors, including regulatory tightening, and the general avoidance of high-growth technology stocks in anticipation of higher interest rates, it said. Growth in the fair value of unlisted portfolio companies was also sluggish because of these reason, it added.
The Vision Funds, which are managed by SBIA, a wholly owned subsidiary of the company established in the UK, has around 450 companies.
Softbank Vision Fund 1 made total investment of $3.33 billion during the fiscal year under review. It held 82 investments including 22 listed portfolio companies) as of March 31, 2022. Softbank Vision Fund 2 made cumulative new and follow-on investments of $40.82 billion in the fiscal year, bringing the fund’s total investment cost to $47.54 billion. The second vision fund held 250 investments including 14 listed portfolio companies at the end of the fiscal year.
Last year in India, Softbank's Vision Funds invested in startups including enterprise software platform Whatfix and payments technology platform operator JusPay Technologies.
In November last year, SoftBank Investment Advisers CEO Rajeev Misra said at a Bloomberg media event that it has deployed $3 billion in 2021 and would invest close to $5-10 billion this year.