Paytm shares jump 16% in 2 sessions; here’s why

Shares of One 97 Communications, the parent company of Paytm, continued gaining streak for the second straight session and rallied nearly 12% in intraday trade on Monday after the payment solutions company announced that its founder and CEO Vijay Shekhar Sharma will acquire a 10.3% stake in the firm. The value of the proposed stake buying is estimated at $628 million, based on Friday’s closing price. The fintech heavyweight has risen as much as 15.7% in the last two sessions following the release of monthly operating performance for July.

Early today, Paytm shares opened 8.2% higher at ₹860.55 against the previous closing price of ₹795.45 on the BSE. During the session so far, the largecap stock has surged as much as 11.6% to ₹887.55, while the market capitalisation increased to ₹53,796 crore. The counter witnessed a surge in buying activities as 2.9 lakh shares changed hands on the BSE compared with two-week average volume of 1.93 lakh stocks. Paytm share price touched a 52-week high of ₹915 on June 19, 2023, and  52-week low of ₹439.60 on November 24, 2022.

In a pre-market hour filing today, Paytm informed the exchanges that Vijay Shekhar Sharma has entered into an agreement to pick up 10.30% stake in Paytm from Antfin (Netherlands) Holding BV, through his 100% owned overseas entity, Resilient Asset Management B.V. As part of the deal, Antfin will transfer 65,335,101 shares of the company to Resilient Asset Management B.V., implying a transfer of 10.30% of the share capital of the Paytm.

“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,” says Sharma.

As a result, Sharma’s shareholding in Paytm (direct and indirect) will increase to 19.42%, whereas Antfin’s stake will reduce to 13.5%.

“The acquisition will be made by Sharma’s 100% owned overseas entity, Resilient Asset Management B.V. (“Resilient”) based in the Netherlands. Closing of the transaction will occur shortly at the prevailing market price. Based on the closing price as on August 04, 2023, the value of the 10.30% stake amounts to $628 million,” Paytm says in a BSE filing.

As per the agreement, Antfin will be issued Optionally Convertible Debentures (OCDs) by Resilient Asset Management B.V. in consideration for the transfer of ownership and voting rights. This will allow Antfin to retain the economic value of its 10.30% stake in Paytm.

“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,” the release notes.

Following this transaction, there will be no change in the management or control of Paytm as Sharma would continue as managing director and CEO, along with the existing board members. However, there will be no nominee of Antfin on the board of Paytm.

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