Ant Group, SoftBank Looking To Sell Paytm Stake

China’s Ant Group and Masayoshi Son’s SoftBank are reportedly looking to sell shares via a secondary share sale in Paytm.

These investors had approached telecom billionaire Sunil Mittal and another Indian conglomerate with an offer to buy their shares, according to an ET report. 

However, the conversation didn’t materialise, the report said, adding that Paytm’s top management, including founder and CEO Vijay Shekhar Sharma, are opposed to a strategic investor coming on the fintech’s board.

In a report on Friday, Bloomberg reported that Mittal was looking for a stake in Paytm by merging Airtel Payments Bank, into Paytm Payments Bank, though subsequent reporting cited Bharti denied this strategy.

Ant Group and SoftBank, however, are more likely to offload shares gradually in the market as part of their plan to exit Paytm. The development with Ant Group also follows after the investment firm’s senior vice president Douglas Feagin stepped down from Paytm’s board of directors.

Ant Group could also be looking to comply with the norms of the market regulator Securities and Exchange Board of India (SEBI). As per SEBI, no single entity can own more than 25% of a ‘professionally managed company’. The investment firm’s stake went over the 25% threshold in the recently concluded buyback.

Ant Group’s parent company Alibaba has recently exited the fintech major, selling a 3.1% stake in Paytm for INR 1,377 Cr. However, Ant Group remains the single largest shareholder with about a 25% stake in Paytm.

SoftBank, which holds a 13% stake in Paytm, is looking to liquidate its position, as tech valuations plummet globally in the face of adverse macroeconomic headwinds. The Japanese investment firm so far has sold about 4.5% of its stake in Paytm for $200 Mn following the fintech’s IPO in 2021.

The dropping valuations and stock prices have hit Paytm especially hard since its IPO. Having debuted at an offer price of INR 2,150, the fintech’s stock price opened at INR 631.85 on Tuesday (February 28), but had fallen more than 3.3% during intraday trading at the time of publishing of this article.

Paytm’s net loss halved year-on-year (YoY) to INR 392 Cr in Q3FY23 and revenue from operations surged 41% yearly to INR 2,062 Cr. More importantly, the fintech major claimed to have achieved EBITDA profitability without ESOP cost in Q3FY23, reporting the same to be at INR 31 Cr during the quarter.