SoftBank's Munish Varma to step down from Paytm, PolicyBazaar boards

Credit: Reuters

Munish Varma, managing partner of Japan’s SoftBank Group, will step down from the boards of recently listed One97 Communications Ltd and PB Fintech Ltd, which operate Paytm and PolicyBazaar respectively, a person familiar with the matter said. 

The move is in line with the Japanese conglomerate’s policy of asking its executives to step down from boards of companies once they get listed, as it gives the executives a greater “flexibility of options”, the person cited above said on condition of anonymity. The two companies will make required disclosures to the stock exchanges soon, the person added. 

News website Moneycontrol first reported the development, quoting anonymous sources. 

SoftBank, which holds significant minority stakes in PB Fintech and One97 Communications, will not be selling any of its shares, the person said. SoftBank owns 17.5% stake in Paytm and a little less than 13% stake in PB Fintech. 

After market hours on Tuesday, Paytm, in a stock exchange disclosure, said that Munish Varma has tendered his resignation as the company’s Non-executive, Non-Independent Director vide letter dated 14 March 2022, with effect from the closure of business hours on 14 March 2022, due to personal commitments and other pre-occupations. 

The company also said that Vikas Agnihotri, Alternate Director to Varma, ceased to be Alternate Director of the company from closure of business hours on 14 March 2022. 

SoftBank has invested over $14 billion in Indian technology startups, most of it over the last five years, and the company counts some of the country’s most-valued technology startups in its portfolio. In 2021 alone, SoftBank invested over $3 billion across 17 deals, Vikas Agnihotri, operating partner, SoftBank Investment Advisers had said on Monday at Mint India Investment Summit 2022. 

In 2021, which was a blockbuster year for initial public offerings in India, the Japanese conglomerate saw two of its biggest portfolio companies getting listed on the Indian stock exchanges -- One97 and PB Fintech. SoftBank had sold shares worth ₹1,689 crore in One97 during its listing, and ₹1,875 crore in PB Fintech. 

Listings of the two companies saw varied responses from public shareholders, with PB Fintech rising over 25% on its market debut, and Paytm’s share price falling more than 20% on its listing day. 

Moreover, Paytm, which was crowned as India’s biggest-ever IPO with the company raising ₹18,300 crore in a mix of primary and secondary share sale, has failed to enthuse public shareholders since then. The stock is down over 70% from its listing price, eroding two-thirds of the company’s market capitalization. 

On Monday, the stock plunged over 12% after the Reserve Bank of India (RBI) barred Paytm’s Payments Bank from onboarding new customers due to violations of norms on know your customer (KYC). One97 Communications holds 49% in Paytm Payments Bank. Paytm founder Vijay Shekhar Sharma in various media interactions on Monday said that the company is confident of complying with the RBI norms and expects the embargo on onboarding new customers to get lifted soon. However, Sharma’s comments did little to arrest panic among public shareholders, with the stock falling another 12% on Tuesday. 

Moreover, public shareholders have raised questions over the profitability of new-age technology companies including Paytm, which reported widening net losses in the previous two quarters. Paytm reported net loss of ₹778.5 crore on a consolidated basis for the quarter ended December 2021, against ₹535.5 crore a year earlier. 

Emails sent to SoftBank and PB Fintech remained unanswered.