Antfin likely to sell 3.6% stake in Paytm via block deal
Antfin, a major player in the Chinese fintech industry, is reportedly making a strategic move in the Indian market by initiating the sale of a 3.6 percent stake in Paytm, a prominent Indian fintech company. This stake accounts for a substantial 2.3 crore shares and is expected to be executed through a block deal, a method involving the bulk buying or selling of shares. The proposed floor price for this transaction, set at a discount of Rs 880.10 per share, suggests Antfin’s strategic approach to divest some of its holdings in Paytm.
As of August 24, Paytm’s shares closed at Rs 904.20 each on the Bombay Stock Exchange (BSE), reflecting a slight 0.15 percent decrease from the previous trading day. This market valuation underscores the dynamic nature of the fintech sector and the potential implications of Antfin’s stake sale for both companies.
Notably, an interesting development surfaced on August 7 when Vijay Shekhar Sharma, the visionary Founder and CEO of One 97 Communications Limited, Paytm’s parent company, announced a pivotal agreement with Antfin. This agreement outlined Sharma’s intention to acquire a 10.3 percent stake in Paytm. This move not only signifies Sharma’s confidence in the company’s future but also hints at a strategic partnership between One 97 Communications and Antfin, possibly aiming to strengthen Paytm’s position in the Indian fintech landscape.
These recent maneuvers collectively underscore the evolving landscape of the fintech industry, interwoven with cross-border collaborations and strategic ownership adjustments. With Antfin’s stake sale and Vijay Shekhar Sharma’s stake acquisition, Paytm’s trajectory could potentially see significant shifts in the near future, warranting close attention from both industry observers and market participants.
According to the filing, an offshore entity named Resilient Asset Management BV, fully owned by Vijay Shekhar Sharma, is poised to acquire a stake in Paytm from Antfin through an off-market transfer. This strategic move will have significant implications for the ownership structure of Paytm. With this transaction’s completion, Sharma’s ownership in Paytm will experience a notable boost, rising to 19.42 percent. In contrast, Antfin’s stake will undergo a reduction, decreasing to 13.5 percent.
This development is part of a larger narrative surrounding ownership changes in Paytm. Earlier this year, in February, Alibaba Group concluded its divestment from Paytm, selling its remaining stake for approximately Rs 1,378 crore (equivalent to $167.14 million) through a block deal. This move was in line with Alibaba’s broader strategy of reevaluating its investments and holdings in various companies.
It’s noteworthy that Alibaba Group, which also encompasses Ant Group and Antfin, had previously divested its stake in Zomato last year, generating $200 million from the transaction. This series of divestments aligns with Alibaba’s efforts to reposition its investment portfolio and streamline its business interests.
In a broader context, Alibaba’s decisions to exit from companies like Bigbasket and Paytm Mall, coupled with its reduced investments in other ventures, underscore the shifting dynamics within the Chinese technology landscape. The company’s actions have been partially attributed to the Chinese government’s increased scrutiny of its operations and its stance on certain political matters. This external pressure has influenced Alibaba’s strategic decisions, prompting it to rethink its involvement in various enterprises.
In essence, these developments paint a picture of significant changes in ownership and investment strategies among key players in the fintech and e-commerce sectors. As both Antfin and Alibaba adapt to evolving circumstances and geopolitical considerations, the trajectories of companies like Paytm could see substantial alterations in terms of ownership, partnerships, and market dynamics.
Apart from Antfin’s exit from Paytm, other significant shareholders have also been divesting their stakes in the company, contributing to a notable shift in its ownership landscape. SoftBank, a prominent investor, has been gradually offloading its shares in Paytm over the past few months in smaller tranches through open market transactions. These divestments have largely been conducted profitably for SoftBank, as Paytm’s share price has consistently remained above Rs 830 during this period, which matches the Japanese investor’s initial cost price.
This strategy of SoftBank’s share sales has proven lucrative, particularly in July, when the Japanese investment firm generated more than $200 million from the sale. SoftBank’s arm, SVF India Holdings (Cayman) Ltd, strategically sold 13,103,148 shares between February 10, 2023, and May 8, 2023, representing around 2.07 percent of the total shareholding. This move resulted in proceeds of approximately $120 million.
The driving force behind SoftBank’s decision to exit Paytm stems from its internal and external pressures. The Japanese technology investment firm has been under pressure to curtail its losses and optimize its investment portfolio. The divestment from Paytm is aligned with SoftBank’s broader strategy to realign its holdings, ensure profitability, and manage its financial performance.
The combination of Antfin’s exit, SoftBank’s gradual divestment, and other stake sales underscores a dynamic period of change within Paytm’s ownership landscape. These strategic actions by major stakeholders reflect both the evolving priorities of these investors and the broader context of the fintech and technology investment sectors. As industry players reassess their positions, the shifts in ownership and investment strategies are likely to continue shaping the trajectory of companies like Paytm and influencing the dynamics of the market as a whole.
The Doklam skirmishes between the Indian and Chinese armies have significantly impacted the investment landscape between the two countries. Following these tensions, the Indian government adopted a stance of increased scrutiny and control over Chinese investments in India. This approach manifested in the form of various restrictions, including the blocking of a substantial number of Chinese investments. Additionally, the Indian government took measures to ban over 200 Chinese mobile applications over a span of three years, citing national security concerns.
Amid these geopolitical tensions, concerns have arisen regarding the significant Chinese shareholding in Paytm, a key player in India’s financial services sector. Both the Indian government and the central bank have expressed reservations about the implications of having a substantial Chinese ownership stake in such a critical sector of the Indian economy. These concerns have had practical implications, leading to delays in granting approvals for certain transactions.
Paytm itself has made disclosures to the market, indicating that the large Chinese shareholding is a pivotal factor contributing to the delay in obtaining approvals for specific matters. This acknowledgment underscores the intricate interplay between geopolitics, national security considerations, and the intricacies of corporate ownership and investment decisions.
The evolving regulatory environment and the backdrop of strained bilateral relations have prompted a reevaluation of foreign investments in sensitive sectors, including finance and technology. As nations navigate the complexities of safeguarding their interests while maintaining a balance with economic and business considerations, the fate of companies like Paytm becomes intertwined with broader geopolitical dynamics. These factors collectively underscore the intricate relationship between politics, economics, and the operations of multinational corporations in an increasingly interconnected world.
