Over the past couple of years, a considerable number of foreign investors divested their stakes in various Indian startups. The reasons for these divestments have varied, ranging from profitable exits to acknowledging the challenges faced by these billion-dollar startups, resulting in losses. In a recent development, SoftBank, a prominent Japanese tech investor, has fully exited from PB Fintech, the parent company of Policybazaar.
In June 2018, PolicyBazaar’s parent, PB Fintech, secured approximately $200 million from SoftBank‘s Vision Fund.
The divestment of SoftBank stakes in Policybazaar occurred through a phased approach. In December 2022, SoftBank sold a 5.1% stake in PB Fintech, valued at Rs 1,043 crore. Subsequently, in October 2023, an additional 2.54% stake, equivalent to 11.4 million shares, was divested. Finally, in December 2023, SoftBank completed the divestment by selling the remaining 2.5% stake in PB Fintech, amounting to Rs 914 crore (approximately $109 million).
SoftBank’s total returns on its investment in Policybazaar amounted to approximately $650 million.
Softbank Exit from Indian Startups
In December 2023, SoftBank also made an exit from Zomato. The investor sold a 1.08% stake in the food delivery company, generating Rs 1,127.5 crore in proceeds.
The dual exit from both PolicyBazaar and Zomato aligns seamlessly with the overarching strategy spearheaded by Masayoshi Son. Over the last 12 months, SoftBank has deliberately and consistently diluted its holdings across various Indian startups through public market deals. This included the successful divestment of stakes totalling $1.8-1.9 billion in four prominent startups – Paytm, Zomato, PB Fintech, and Delhivery – that underwent public offerings in 2021 and 2022. It’s worth noting that SoftBank had initially invested a substantial sum, amounting to $2.3-2.4 billion, across these four dynamic companies.
As of September 30, 2023, SoftBank held a 4.39% stake in PB Fintech through Svf Python II (Cayman) Limited. Mutual funds, including Franklin India and Mirae Asset, maintained a 7.83% stake in PB Fintech, while Tencent and Steadview Capital were significant investors in the insurance marketplace. PB Fintech’s founders, Alok Bansal and Yashish Dahiya, held 1.67% and 4.64% stakes, respectively.
SoftBank’s portfolio companies, including FirstCry, Ola Electric, and Swiggy, are anticipated to go public this year. FirstCry and Ola Electric have already submitted draft IPO papers in December 2023.
SoftBank, recognized as one of the early foreign investors in India’s startup ecosystem, has played a crucial role in influencing the entrepreneurial landscape. The investment firm has funded nearly one-fifth of India’s expansive pool of over 100 unicorns in the last few years. The monetary commitment to Indian startups by SoftBank is substantial, reaching a notable sum of $15 billion. Within this total, the SoftBank Vision Fund alone accounts for a substantial $11 billion investment. The residual $4 billion has been strategically directed towards renewable energy and infrastructure sectors.
With SoftBank’s complete exit from Policybazaar and Zomato, the question looming is whether this move will trigger a domino effect, prompting other foreign investors to follow suit. Alternatively, could we witness a new wave of capital-seeking opportunities in the dynamic Indian startup ecosystem? Let us know your thoughts in the comment section below!
