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Paytm CEO buys 10% stake from Ant for $628M

Ryan Lawler
Vijay Shekhar Sharma, founder of Paytm

Vijay Shekhar Sharma, founder of Paytm/Photo: Bryan van der Beek via Getty Images

Paytm CEO Vijay Shekhar Sharma is buying a 10.3% stake in the company from an affiliate of China's Ant Financial.

Why it matters: The deal will simplify Paytm's ownership structure while reducing concerns over Chinese control of the Indian payments firm.

What's happening: Resilient Asset Management, a Netherlands-based firm wholly owned by Sharma, will acquire nearly half of Ant's stake in Paytm from a Netherlands holding company.

Details: The transaction is being executed at Paytm's closing price on Aug. 4, making the 10.3% stake worth about $628 million.

  • Sharma's offshore entity will issue Ant optionally convertible debentures, letting the Chinese firm "retain economic value of the 10.3% stake," Paytm said in a filing.
  • "Accordingly, no cash payment will be made for this acquisition, and neither will any pledge, guarantee, or other value assurance be provided by Mr. Sharma, directly or otherwise," it added.

State of play: Following the deal, Sharma's holding in Paytm will rise to 19.4%, making him the company's largest shareholder.

  • Meanwhile, Ant's stake will decline to 13.5%.

Zoom out: The deal could mitigate concern over Chinese control of one of India's most prominent tech firms as geopolitical tensions rise between the nations.

  • Earlier this year, India banned more than 200 Chinese-owned apps from operating in the country.

Between the lines: Reducing Ant's ownership also could help Paytm gain licenses it needs to operate in India.

  • Last November, the Reserve Bank of India rejected Paytm's payment aggregator's license application.
  • In March, however, it received an extension to resubmit its application.

Of note: Ant isn't the only multinational looking to unload shares in Paytm, which has seen its share price fall 45% since listing in November 2021.

  • Chinese e-commerce giant (and Ant affiliate) Alibaba sold its entire stake in the payments firm in February for $167 million.
  • Separately, Softbank has pared back its Paytm stake through multiple open-market deals.
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