Vijay Shekhar Sharma, the Founder and CEO of One 97 Communications, is set to acquire a 10.30% stake in Paytm from Antfin (Netherlands) Holding BV. This transfer will be facilitated through Sharma’s wholly owned overseas entity, Resilient Asset Management BV.
The deal will result in Sharma’s total shareholding in Paytm, both direct and indirect, climbing to 19.42%, while Antfin’s share will drop to 13.5%. Consequently, Antfin will no longer be the largest shareholder in the Indian fintech company.
As part of the agreement, Antfin will receive Optionally Convertible Debentures (OCDs) from Resilient Asset Management BV. The transaction is expected to conclude shortly at the prevailing market price. Based on the closing price as of August 4, 2023, the 10.30% stake is valued at approximately $628 million. The acquisition will grant Resilient ownership and voting rights over the 10.30% block.
Interestingly, the agreement stipulates that there will be no cash payment for the acquisition, and Sharma will provide no pledge, guarantee, or value assurance.
Vijay Shekhar Sharma was once classified as Paytm’s promoter but was later declassified ahead of the company’s listing. The deal does not foresee any change in Paytm’s management structure. Sharma will continue as the company’s CEO, with the existing board remaining at the helm.
Following the announcement of the impending stake transfer, Paytm shares spiked by 11% to 887.70 in the opening trade. This is a clear indication of the market’s positive response to the news. At the time of writing, PayTM is trading at Rs. 846.35, up 6.25% today, with a marketcap of 53,680 Crore INR.
Sharma expressed his appreciation for Ant’s support over the years, saying, “I am proud of Paytm’s role as a true champion of made-in-India financial innovation. Our achievements in revolutionizing mobile payments and contributing to formal financial services inclusion in the country have been significant.”
Also read: Paytm Q1 FY2024 Results: Is Paytm profitable now?
The deal comes amidst the Indian government’s scrutiny of Chinese investments in India, particularly after the Doklam border skirmishes. Paytm’s large Chinese shareholding had previously been flagged as a concern, leading to several pending approvals for the company. This new ownership arrangement could alleviate some of these concerns.
However, despite these challenges, Paytm assures that these regulatory hurdles have not had a substantial impact on its business and revenues. While some operations, like onboarding new online merchants and customers, were temporarily halted, most of the significant players have already been integrated by other payment aggregator firms.
This move is being seen as a major milestone in the restructuring of Paytm’s ownership and reflects Sharma’s commitment to the fintech giant he founded. It is a testament to the transformative role Paytm has played in India’s digital payment landscape.
Read about my personal view on Paytm share price prediction
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