Paytm chairman Vijay Shekhar Sharma will buy a 10.3 percent stake in the company he founded from a unit of Chinese fintech giant Ant Financial, worth $628 million (Rs 51.95 billion). ), a deal that would make him the company’s single largest shareholder.
Analysts said the move comes as Paytm Chief Executive Sharma seeks to simplify its ownership structure amid broader concerns over Chinese ownership of Indian fintech firms.
Sharma will now be the largest shareholder in the digital payments company with a 19.42 percent stake.
“Both the government and the RBI are concerned about China’s stake in Indian fintech companies, so the focus is on reducing Chinese companies’ stake in Paytm,” said analysts at a Mumbai-based domestic brokerage, who asked not to be named because they were not authorized to speak to the media. chat.
Based on Paytm’s latest closing price, Sharma’s stake purchase from Antfin (Netherlands) Holding BV is worth $628 million, which will reduce the Chinese company’s stake in the company to 13.5%.
Instead of paying cash for equity, an entity owned by Sharma will issue convertible bonds to Antfin.
“No cash will be paid for this acquisition, nor will Mr. Sharma provide any pledge, guarantee or other assurance of value, directly or otherwise,” Paytm said in a statement on Monday.
There will be no change in the management or control of Paytm, the company said.
Antfin’s sell-off comes after China’s Alibaba sold its entire stake in Paytm in February. Japan’s SoftBank Group has also been trimming its stake in Paytm through open market transactions, dropping its stake to 9.18% after the latest deal.
Shares of Paytm jumped 11.4% on Monday following the news and are up more than 50% so far this year.
Despite the rise, the company was still 60% below its November 2021 listing price as of last close, amid doubts about its business model and widespread concerns about stretched valuations for loss-making tech companies.
The RBI rejected Paytm’s application for a payment aggregator’s license in November last year, but granted the company an extension in March to reapply for the license.
© Thomson Reuters 2023
Svlook
