Two companies that recently made headlines—Adani Group, ORCCP’s report of selling inferior coal at inflated prices, and Paytm Payments Bank Limited, barred by RBI from accepting deposits, credit transactions, or top-ups in any customer accounts, wallets, and FASTags—seem to have found common ground in the fintech sector.

According to reports, Adani Group chairman Gautam Adani is likely considering acquiring a stake in Paytm’s parent company, One97 Communications.

Additionally, Paytm founder and CEO Vijay Shekhar Sharma is said to have visited Adani at his office in Ahmedabad on Tuesday to “finalize the contours of a deal.”

Founded by Sharma in 2007, One97’s IPO was the second largest in India, and the company currently boasts a market capitalization of over Rs 21,000 crore.

Vijay Shekhar Sharma holds approximately 19 per cent of One97 Communications, with his stake valued at Rs 4,218 crore based on the stock’s closing price of Rs 342 per share on Tuesday. He directly owns 9 percent of Paytm and another 10 percent through Resilient Asset Management, a foreign entity.

According to One97’s stock exchange filings, both Sharma and Resilient are classified as public shareholders.

Other major shareholders of One97 include the private equity fund Saif Partners, which holds 15 per cent, Antfin Netherlands, founded by Jack Ma, with a 10 per cent stake; and the company’s directors, who collectively own 9 per cent.

Is It True Or Mere Speculation?

However, Paytm has denied any such discussion in an exchange filing and has also issued a letter stating, “It is speculative, and the company is not engaged in any discussion in this regard.”

However, if the deal is successfully negotiated, it will mark the ports-to-airports conglomerate’s entry into the fintech industry, positioning it against competitors like Google Pay, Walmart-owned PhonePe, and Mukesh Ambani’s Jio Financial.

Although Paytm has explicitly denied such discussions, the report, quoting sources, said that Adani and Sharma have been in talks for an extended period. Their recent meeting at Adani Corporate House in Ahmedabad on Tuesday focused on “finalizing the contours of the deal.”

The reported sources also mentioned that Adani is engaging with West Asian funds to attract them as investors in One97, the company that pioneered mobile payments in India.

Potential Benefits Of A Partnership Between Adani and Paytm

Still, if we were to go ahead and speculate that these reports are indeed true, a collaboration between Adani Group and Paytm could yield significant benefits for both companies, leveraging their respective strengths and expanding their market presence in strategic areas.

For Adani Group, partnering with Paytm would mark its entry into the rapidly growing fintech industry, allowing it to diversify its portfolio beyond its core businesses of infrastructure, energy, and logistics.

Paytm’s extensive user base and established brand in digital payments and financial services could provide Adani with immediate market penetration and customer access.

Likewise, Adani can leverage Paytm’s advanced technology, expertise in UPI payments, and its merchant network to develop its own fintech solutions, enhancing its digital ecosystem.

By integrating Paytm’s financial services into Adani’s various consumer-facing platforms, such as Adani One, the group can offer a more comprehensive service package, increasing customer engagement and loyalty.

Collaborating with Paytm could enable Adani to offer co-branded credit cards and digital banking services, adding value to its consumer app and enhancing its financial service offerings.

On the other hand, Paytm could benefit from Adani’s extensive infrastructure in ports, airports, and logistics, enhancing its supply chain efficiency and expanding its merchant network.

Also, Adani’s financial backing could provide Paytm with the necessary capital to scale its operations, invest in new technologies, and expand its market reach.

At the same time, collaborating with Adani can help Paytm integrate its payment solutions into Adani’s diverse business operations, such as retail and energy, facilitating seamless transactions and increasing payment volumes.

A partnership with a well-established conglomerate like Adani could boost Paytm’s credibility and trustworthiness in the market, which took a hit recently, attracting more customers and investors.

The partnership can open up new opportunities for Paytm to expand its services into sectors where Adani has a strong presence, such as rural and semi-urban areas, leveraging Adani’s reach and influence.

Adani Exploring eCommerce and Payments Business

Indian conglomerate Adani is reportedly discussing entering the eCommerce and payments space.

According to a report by the Financial Times on Tuesday (May 28), citing unnamed sources, the company is considering applying for a license to participate in India’s Unified Payments Interface (UPI) network.

The report indicates that Adani is also in talks with banks to finalize plans for a co-branded credit card and is negotiating to offer online shopping via India’s state-supported eCommerce platform, the Open Network for Digital Commerce.

“There are just three business conglomerates running this country — the Tatas, the Ambanis, and the Adanis,” Jayanth Kolla, a Bengaluru-based technology analyst, stated in the report. “Adani is one of the three groups that does not have significant consumer-facing businesses.”

According to the report, the new services would be offered through Adani One, the company’s consumer app, which debuted in late 2022 and already provides travel services such as flight and hotel reservations.

These moves would allow the company to compete with Google and India’s Reliance Industries.

Last month, Google announced its investment in Flipkart, a Walmart-backed Indian digital commerce company.

Weeks earlier, the tech giant opened its digital wallet to users in India; digital wallets are now the preferred payment method for 55% of retail purchases in India, with 80% of wallet users opting for UPI.

Meanwhile, India is expanding its real-time payments functionality by establishing interoperability of digital payment systems for internet banking. The launch is expected later this year, aiming to facilitate faster fund settlements for merchants.

Currently, internet transactions processed through payment aggregators are not interoperable, as banks must integrate separately with each PA for different online merchant partners. This requirement has proven difficult for bank staff to manage, especially considering the vast number of merchant partners each bank has.

Additionally, the absence of standardized payment systems and rules for each PA has led to payment delays and increased security risks, problems that the interoperability initiative aims to solve.

Revisiting The Paytm Debacle

One97 Communications initially started as a recharge platform and later transitioned its payment and merchant acquiring operations to Paytm Payments Bank (PPBL).

However, from March 15 onwards, the Reserve Bank of India (RBI) barred Paytm Payments Bank Limited (PPBL) from accepting deposits, credit transactions, or top-ups in any customer accounts, wallets, and FASTags to protect customers’ interests, including merchants.

As a result, the company shifted its focus to UPI payments, distribution, and merchant acceptance.

Earlier this month, One97 reported its losses had widened to Rs 550 crore, compared to a loss of Rs 167.5 crore in the same period the previous year, as disclosed in a regulatory filing.

“Our fourth quarter FY24 results were impacted by temporary disruption on account of UPI transition and permanent disruption due to the PPBL embargo.

Paytm reported a revenue of Rs 2,267 crore, a modest decline of 3 percent year-on-year. Our contribution margin was 57 percent, including UPI incentives, and 51 percent, excluding UPI incentives,” Paytm said in a statement.

Paytm also warned of potential job cuts and indicated plans to trim non-core assets after reporting its first-ever sales decline, reflecting the impact of a regulatory probe.

Adani Group Alleged Coal Scam

Recent investigations have uncovered significant irregularities in coal shipments to Tamil Nadu’s state power utility, highlighting issues of low-quality coal and environmental degradation.

An OCCRP exposé reveals that between January and October 2014, the Adani group sold coal shipments initially priced as low-quality at three times their cost, raising concerns about financial and regulatory malpractices.

Despite repeated attacks on the Adani Group by foreign media organizations such as The Financial Times and the George Soros-backed OCCRP, Indian investors remain largely unconcerned as the group’s stocks continue to soar.

The market appears immune to these allegations, with Adani Group’s market capitalization surging by over Rs 11,000 crore on the next day, reaching a total of $200 billion (more than Rs 16.9 lakh crore), is an example of the same.

The Last Bit

A strategic partnership between Adani Group and Paytm has the potential to create a powerful synergy, leveraging Adani’s infrastructure and financial muscle with Paytm’s technological prowess and market presence in the fintech space.

The collaboration, if it were to come through, could accelerate growth, enhance service offerings, and provide a competitive edge to both companies in the rapidly evolving digital economy.