Vijay Shekhar Sharma, the Paytm founder, will acquire an additional 10.30 per cent stake in the company from an arm of Chinese financial tech giant Antfin in a no-cash deal that will make him its largest shareholder.
The move comes amid broader concerns about Chinese ownership in Indian financial technology companies, analysts said.
Based on the closing price of One97 Communications (the parent of Paytm) as on August 4, 2023, the value of the 10.30 per cent stake amounts to $628 million. These shares will be purchased in an off-market transaction.
As per the terms of the deal, Sharma will purchase the stake from Antfin (Netherlands) Holding BV through his 100 per cent owned overseas entity Resilient Asset Management BV.
Resilient Asset will issue optionally convertible debentures (OCDs) to Antfin which in turn will allow the latter to retain economic value of its
previous 10.30-per-cent stake.
This is seen as demonstrating Antfin’s continued confidence in the business potential of the company.
“Accordingly, no cash payment will be made for this acquisition, and neither will any pledge, guarantee, or other value assurance be provided by Sharma, directly or otherwise,” One97 Communications said in a regulatory filing.
The company added that following the transaction, there would be no change in the management or control of Paytm, since Sharma would continue as managing director and CEO.
The existing board would continue just as it is, without any changes.
Besides, there is now no nominee of Antfin on the board of Paytm.
Antfin, which is an affiliate of China’s Ant Group Co, held 23.79 per cent stake in the company during the quarter ended June 30, 2023, while Sharma’s holding stood at 9.12 per cent.
Antfin’s stake will drop to nearly 13.49 per cent even as Sharma will see his stake go up to 19.42 per cent.
Antfin’s selldown comes after China’s Alibaba sold its entire stake in Paytm in February. Japan’s Softbank Group Corp has also been cutting its stake in Paytm through open market deals, with its holding down to 9.18 per cent after its latest deal.
Audit firm Price Waterhouse Chartered Accountants has resigned as the auditor of Paytm Payments Services Limited with immediate effect, Paytm said in a regulatory filing, according to PTI.
In its resignation letter, PwC has cited the change of auditors at the holding company level and Paytm’s practice to align the auditor of the holding company and subsidiaries.
“Price Waterhouse Chartered Accountants LLP Statutory Auditors of material subsidiary i.e. Paytm Payments Services Limited (PPSL) have resigned with effect from August 7, 2023,” One97 Communications, which operates under Paytm brand name, said in the filing.
PPSL has been barred by the Reserve Bank from onboarding new customers online till the time the firm is granted an Online Payment Aggregator license.
Paytm said PwC has “not raised any concern or issue”.
With inputs from Reuters