Paytm’s Singapore Subsidiary Approves Stake Sale In PayPay

SUMMARY

Paytm has informed the bourses that the board of its subsidiary, One97 Communications Singapore, has approved the sale of stock acquisition rights in PayPay Corporation

Founded in 2018 via a collaboration between Softbank, Yahoo Japan, and Paytm, PayPay is a fintech company that offers smartphone payment services using barcodes

As per Paytm’s red herring prospectus, it held SARs amounting to 7.2% equity stake in PayPay as of March 31, 2021

Hours after it was reported that Paytm is looking to sell stake worth $250 Mn in Japanese digital payments firm PayPay Corporation to SoftBank, the fintech company informed the bourses that the board of its subsidiary, One97 Communications Singapore, has approved the sale.

In an exchange filing, Paytm said that the Singapore subsidiary’s board approved sale of stock acquisition rights (SARs) in PayPay Corporation, Japan. However, Paytm didn’t disclose who it will be selling the stake to.

For the uninitiated, SARs are options/ warrants that give the holder the right to sell securities in the issuing company. These are generally issued as part of a company’s equity-based compensation plan.

Paytm has decided to sell its SARs in the Japanese company to boost its cash reserve. “This transaction will increase the consolidated cash balance of the company to the extent of sale consideration to be received by Paytm Singapore,” the exchange filing read.

Founded in 2018 via a collaboration between Softbank, Yahoo Japan, and Paytm, PayPay is a fintech company that offers smartphone payment services using barcodes (QR Codes), similar to Paytm. The Tokyo-based company claims to have a user base of 65 Mn.

As per Paytm’s red herring prospectus, it held SARs amounting to 7.2% equity stake in PayPay as of March 31, 2021.

This would be the second such stake sale by Paytm this year. In August this year, Paytm sold its events and movies ticketing arm, Paytm Insider, to Zomato for $241.8 Mn (INR 2,048 Cr).

As a result of the sale, Paytm posted a net profit of INR 930 Cr in the second quarter of the financial year 2024-25 (Q2 FY25) as against a loss of INR 292 Cr in the year-ago period. It said that the PAT included a one-time exceptional gain of INR 1,345 Cr on account of the sale.

However, its top line witnessed a decline during the quarter. Paytm’s revenue from operations fell 34% to INR 1,160 Cr in the September quarter of 2024 from INR 2,519 Cr in the year-ago period.

The company’s cash balance at the end of the quarter stood at INR 9,999 Cr, up over 23% from INR 8,108 Cr at the end of the preceding June quarter.

Shares of Paytm ended Friday’s (December 6) trading session 2.02% higher at INR 975.80. The shares touched a fresh 52-week high of INR 990.90 during the intraday trade.