New Delhi, August 6, 2023 – Paytm founder Vijay Shekhar Sharma has agreed to buy a 10.30% stake in the company from Antfin (Netherlands) Holding BV, an affiliate of Chinese financial technology giant Ant Group. The deal, which is worth an estimated $2.4 billion, will see Sharma’s stake in Paytm increase to 30.6%.
The acquisition comes at a time when Paytm is facing increasing competition from rivals such as Google Pay and PhonePe. The company has also been struggling to turn a profit, posting losses of $3.9 billion in the financial year 2022-23.
Sharma said that the acquisition would help Paytm to “consolidate our ownership and control” and “strengthen our long-term strategic positioning.” He added that the company would continue to focus on “growing our user base, expanding our product offerings, and deepening our reach.”
The deal is subject to regulatory approvals. As per the agreement between Sharma and Antfin, Resilient will get ownership and voting rights of the 10.30 per cent block. The overseas entity owned by Sharma will issue optionally convertible debentures (OCDs) to Antfin, allowing it to retain economic value of the 10.30 per cent stake.
The company release said that no cash payments will be made for this transaction and Sharma will also not provide any pledge, guarantee or other value assurance either directly or otherwise. There will be no changes in the management or control of Paytm as Sharma would continue to be the Managing Director and CEO of the company and the existing board would continue to function as is. There is also no nominee of Antfin on the Board of Paytm.
“Paytm remains a professionally managed company with no identifiable promoter. Further, there is no nominee of Antfin on the Board of Paytm,” the release read.
Commenting on the transaction, Sharma said that he is “proud of Paytm’s role as a true champion of made-in-India financial innovation”. He also said that the company played a key role in revolutionizing mobile payments and contributed to formal financial services inclusion in India.
“I am proud of Paytm’s role as a true champion of made-in-India financial innovation, and our achievements in revolutionizing mobile payments and contributing to formal financial services inclusion in the country. As we announce this transfer of ownership, I would like to express my sincere gratitude to Ant for their unwavering support and partnership over the past several years,” Sharma said.
Following the announcement, shares of One 97 Communications (Paytm) jumped 12 per cent in early trade. One 97 Communications’ stock hit a high of Rs 887.55 on the BSE at the time of writing this story.
Analysts’ Reaction
Analysts have welcomed the deal, saying that it will give Sharma more control over Paytm’s future. They also believe that the acquisition will help to boost investor confidence in the company.
“This is a positive development for Paytm,” said Akash Mehta, an analyst at ICICI Securities. “It gives Sharma more control over the company and sends a positive signal to investors.”
“The acquisition will also help to boost Paytm’s brand value,” said Siddhartha Khemka, an analyst at Motilal Oswal Financial Services. “It will be seen as a vote of confidence in the company by one of its largest shareholders.”
Additional Data:
- The closing of the transaction will occur shortly at the prevailing market price. Based on the closing price as of Friday, August 4, 2023, the value of 10.30% stake amounted to $628 million.
- The deal will give Resilient ownership and voting rights to the 10.30% block.
- Antfin will be issued OCDs by Resilient Asset Management BV in consideration for the transfer, and to retain the economic value.
- The new ownership structure will likely benefit the company, Paytm further claimed.
What Does This Mean for Paytm’s Future?
The acquisition of Antfin’s stake in Paytm is a significant development for the company. It gives Sharma more control over Paytm’s future and sends a positive signal to investors. It is too early to say what the long-term impact of the acquisition will be. However, it is clear that Sharma is committed to making Paytm a success. The company has a lot of potential, and with Sharma’s leadership, it is well-positioned to grow and thrive in the years to come.
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