Vijay Shekhar Sharma Becomes Largest Paytm Shareholder in Landmark Acquisition

Rajesh
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Founder Vijay Shekhar Sharma Takes Control of Paytm 

Vijay Shekhar Sharma, the Founder and CEO of One 97 Communications Limited, is set to become the largest shareholder in Paytm. An agreement has been reached between Sharma and Antfin, wherein Sharma's overseas entity, Resilient Asset Management B.V., will acquire a 10.3 percent stake in Paytm through an off-market transfer. This acquisition will increase Sharma's shareholding in Paytm to 19.42 percent, while Antfin's shareholding will reduce to 13.5 percent. 

Vijay Shekhar Sharma Becomes Largest Paytm Shareholder in Landmark Acquisition
 Vijay Shekhar Sharma Becomes Largest
Paytm Shareholder in Landmark Acquisition

A Strategic Move with Regulatory Implications 

The announcement of this major transaction led Paytm's share prices to soar over 10 percent. The unique structure of this deal has divided ownership and economic rights between Sharma and Ant Financial. This move not only reduces concerns over Chinese shareholding but also demonstrates Sharma's firm control over the company. With VSS now holding the single largest share, Paytm is better insulated from any potential hostile bids. Together with Elevation Capital's support, Vijay and his allies now own more than 30 percent of the company, providing them with adequate control. 

Sharma has kept the regulators informed about the move and has sought approval from RBI and market regulator SEBI. This strategic maneuver aims to reassure the regulators that Paytm remains committed to Indian interests and governance. 

Dynamics of the Deal 

As per the agreement, Resilient will acquire ownership and voting rights of the 10.3 percent stake. In exchange, Resilient will issue Optionally Convertible Debentures (OCDs) to Antfin, allowing the latter to retain the economic value of the stake. This arrangement showcases Antfin's continued confidence in Paytm's business potential. 

With this acquisition, Antfin's shareholding in Paytm will drop from 23.79 percent to 13.5 percent. Additionally, there will be no Antfin nominee on Paytm's board. Interestingly, no cash payment will be made for this acquisition, and Vijay Shekhar Sharma will not provide any pledge, guarantee, or other value assurance directly or indirectly. 

Based on the stock's closing price on August 4, the value of the 10.3 percent stake amounts to $628 million. 

Sharma's Gratitude and Vision 

Vijay Shekhar Sharma expressed his pride in Paytm's role as a champion of made-in-India financial innovation and its contributions to revolutionizing mobile payments and promoting financial inclusion. He extended his sincere gratitude to Ant Financial for their unwavering support and partnership over the years. 

Addressing Chinese Shareholding Concerns 

The Indian government has been cautious about Chinese investments in India, leading to blockages of most Chinese investments. Paytm's large Chinese shareholding has been a particular concern. However, Paytm has been actively seeking approvals from the government and RBI to continue its online payment aggregation business. 

Paytm's performance continues to impress, with revenue growth of 39.4 percent in the June quarter. The company has also narrowed its losses by 45 percent compared to the same period last year. With robust revenue from its payment and financial services businesses, Paytm is well-positioned for further growth. 

Shareholders' Exits and SoftBank's Moves 

Besides Antfin, other shareholders have been exiting Paytm, including Alibaba Group, which sold its remaining stake earlier this year. SoftBank has also been offloading shares, generating significant profits in the process. 

Paytm's financials remain strong, with increased cash balances and growing revenue streams. The company's performance reflects its commitment to advancing digital financial services in India. 

In conclusion, Vijay Shekhar Sharma's strategic acquisition of a significant stake in Paytm marks a significant milestone in the company's journey. With the Chinese shareholding concerns addressed and regulatory approvals sought, Paytm is poised to strengthen its position as a leading player in India's financial services landscape.

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