Paytm Shares Soar After Vijay Shekhar Sharma Becomes Largest Shareholder

Paytm shares were trading 6% higher to their previous close after the fintech giant announced founder and CEO Vijay Shekhar Sharma acquiring a 10.3% stake in the company on Monday (August 7) from the Netherlands-based Antfin Holdings BV, an affiliate of the Chinese conglomerate Ant Group.

During the early hours of trading, the share price of the fintech hit a high of INR 887.55, up 11.58% from Friday’s close of INR 795.45. However, the shares gave up some of the gains to trade at INR 847.45 apiece at 1:25 PM on Monday (August 7).

The off-market transaction announced earlier today will see Sharma’s shareholding rise to 19.42%, while Antfin’s shareholding will fall to 13.5%. The shares will be transferred from Antfin to Resilient Asset Management, a holding company fully owned by Sharma.

Based on the closing price as on August 4, the stake is worth $628 Mn. However, this is not a cash transaction, as Sharma will acquire the ownership and voting rights, while Antfin will retain the economic rights of the shares via optionally convertible debentures (OCDs) that Resilient will issue in favour of Antfin.

The transaction will mean that Ant Group will not remain Paytm’s largest shareholder, making Sharma the largest shareholder in the company.

The share transfer comes after Ant Group’s senior vice president Douglas Feagin stepped down from his position as a non-executive, non-independent director of Paytm this February.

The move can also be interpreted as a compliance measure from the fintech giant, as sector regulator SEBI (Securities and Exchange Board of India) mandates no single entity can own more than 25% of a ‘professionally managed company’.

Over the past few months, Paytm shares have had a strong bounce back on the stock market, as the price has gone up by nearly 60% since the start of 2023, after witnessing a steep decline during most of 2022.

Paytm reported a 44.5% year-on-year (YoY) decline in its consolidated net loss at INR 358.4 Cr in the June quarter (Q1) of the financial year 2023-24 (FY24). Helped by the growth in the loan distribution and payments business, the fintech player’s operating revenue jumped 39% to INR 2,342 Cr in Q1 FY24 from INR 1,680 Cr reported in Q1 FY23.