SoftBank likely to sell Zomato shares as lock-in period ends: Sources
SoftBank, a prominent global investor known for its involvement in technology and internet ventures, holds a notable stake in Zomato, a well-known food delivery aggregator and restaurant discovery platform based in India. As the company’s investment portfolio is diverse and expansive, its decision-making processes and strategic moves can significantly impact the businesses it invests in.
In this context, recent reports suggest that SoftBank is contemplating the sale of its shares in Zomato through block deals. A block deal involves a substantial volume of shares being traded as a single transaction, typically occurring outside of regular market hours. This type of trading mechanism is often preferred by institutional investors like mutual funds, who can transact significant positions while minimizing market impact.
The discussions around SoftBank’s potential sell-off coincide with the conclusion of the lock-in period associated with the Blinkit deal. Lock-in periods are common restrictions that prohibit early investors or insiders from selling their shares immediately after a notable event, such as an initial public offering (IPO) or a major deal. This practice is aimed at maintaining stability in the company’s stock price and preventing sudden market disturbances caused by a massive influx of shares.
If SoftBank moves forward with the plan to sell its Zomato shares via block deals, it could have substantial implications for the company’s stock performance and the broader investment landscape. The unlock of shares from the Blinkit deal, expected to occur on August 28, marks a crucial moment as investors and market participants watch for potential shifts in share ownership and subsequent market reactions.
However, it’s essential to note that this information is based on insider sources, and as with any financial news, it’s prudent to wait for official announcements or reliable news sources to verify the accuracy of such reports.
SoftBank’s involvement in Zomato extends to its ownership of a 3.35 percent stake in the company. This particular stake was acquired as a result of the Blinkit deal, wherein SoftBank sold a portion of its holdings to Zomato. The Blinkit deal itself marked a significant transaction, with implications for both SoftBank and Zomato’s positions in the market.
In more specific terms, SoftBank received this 3.35 percent stake in Zomato during the Blinkit deal. The value attributed to these shares, as implied by the deal, stood at Rs 70.76 per share. This figure represents the assessed value of each Zomato share that SoftBank acquired through the Blinkit transaction. This value is calculated based on various factors including the prevailing market conditions, the company’s financial performance, its growth trajectory, and potentially the terms negotiated between SoftBank and Zomato.
Despite the significance of this deal and its implications for both companies, certain details remain elusive. Despite attempts to gather more information by reaching out to both Zomato and SoftBank, no response was received at the time of reporting. This lack of response has left some unanswered questions, making it crucial for investors and market observers to await official statements or any subsequent developments that may shed light on the situation.
In conclusion, SoftBank’s 3.35 percent stake in Zomato, acquired through the Blinkit deal at an implied value of Rs 70.76 per share, signifies an important phase in both companies’ relationship and financial standing. The lack of response to e-mail queries highlights the necessity for further information to provide a comprehensive understanding of the circumstances surrounding this deal and its potential impacts.
Zomato’s current stock price, hovering at approximately Rs 90 per share, has provided a positive turn of events for its investors, particularly those who participated in the earlier deals. This surge in the stock price has resulted in potential profits for these investors, including SoftBank, which stands to gain from the sale of its shares. The increased valuation of Zomato’s shares reflects a combination of factors such as market sentiment, the company’s performance, industry trends, and broader economic conditions.
In light of this development, there is a growing interest among investment banks to capitalize on the demand for Zomato shares. These banks are actively working on building a book, essentially a compilation of investor interest and orders, to effectively manage the potential trading activity and ensure a seamless execution of transactions. The objective is to match sellers, like SoftBank or other early investors, with buyers who are eager to acquire shares of the rapidly growing food delivery and restaurant discovery platform.
Notably, the lock-in period imposed on certain stakeholders has been a defining aspect of the deal involving Zomato. This lock-in period, which temporarily restricts the sale of shares, applies to three prominent Venture Capital firms: SoftBank, Sequoia, and Tigerglobal. These firms have been integral to Zomato’s journey by providing essential funding and support during critical phases of its growth.
As the lock-in period concludes, these firms are now at a juncture where they can potentially benefit from the increased stock value and choose whether to hold or sell their shares based on their strategic objectives.
In conclusion, Zomato’s rising stock price, currently at Rs 90 per share, signals a favorable scenario for investors and stakeholders involved in earlier deals. Investment banks are actively working to accommodate the heightened demand for Zomato shares, while the conclusion of the lock-in period for major Venture Capital firms introduces a pivotal moment for them to make decisions about their shareholdings. The dynamic interplay of these elements shapes the trajectory of Zomato’s stock performance and highlights its significance within the investment landscape.
