Paytm sets up joint venture general insurance co; to invest ₹950 crore in 10 years
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Fintech company One97 Communications, which operates under the Paytm brand, has formed a joint venture general insurance company and has committed to invest ₹950 crore over a period of 10 years in the new entity. The digital payment company in an exchange filing said that it has received its board's nod to set up the joint venture firm Paytm General Insurance Limited, subject to requisite regulatory approvals.
“The board of directors of One97 Communications Limited, in their meeting held on May 20, 2022, has approved the proposal to invest an amount of upto ₹950 crore in Paytm General Insurance Limited (PGIL) in tranches, over a period of 10 years and to hold upfront equity stake of 74%,” the company said in a BSE filing on Saturday.
Initially, One97 Communications (OCL) will own a 49% stake in PGIL, while the remaining 51% stake would be held by OCL’s managing director Vijay Shekhar Sharma owned and controlled company VSS Holding Private Limited (VHPL).
Post the investment of ₹950 crore in tranches, Paytm will raise its stake in PGIL to 74% stake, while VHPL’s holding will come down to 26%. Consequent to this investment, PGIL will become a subsidiary of the company, as per the filing.
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The development came after Paytm’s proposed deal to acquire Raheja QBE General Insurance was terminated, nearly two years after the company first announced its plan for the acquisition. In July 2020, Paytm had announced that the company along with its founder Vijay Shekhar Sharma will acquire 100% stake in Mumbai-based private sector general insurance company Raheja QBE.
In a separate development, the company also announced the re-appointment of Vijay Shekhar Sharma as managing director (MD) and chief executive officer (CEO) of the company for a tenure of 5 years, effective from December 19, 2022 to December 18, 2027.
Besides, the company has also appointed Madhur Deora, chief financial officer of the company, as an additional director, effective from May 20, 2022. Adding to it, Deora has also been appointed as whole-time director for a tenure of 5 years effective from May 20, 2022 to May 19, 2027.
The payment solutions company, which competes with Google Pay and PhonePe, has closed the financial year FY22 with a net loss of ₹2,396 crore as against a loss of ₹1,701 crore in the previous fiscal, weighed down by higher expenses. Its revenue from operations at ₹4,974 crore as compared to FY21, driven by strong growth in revenue from financial services like lending, Paytm Money, insurance and other services like FASTag sales.
For the January-March quarter of 2022, Paytm reported consolidated net loss of ₹762.5 crore as compared to a loss of ₹444.4 crore in the corresponding quarter of the previous fiscal. However, the consolidated revenue from operations jumped 89% to ₹1,540.9 crore compared with ₹815.3 crore in Q4 FY21.