Following Alibaba's move earlier this year to offload its stake in Paytm, Ant Group has recently taken significant steps to reduce its holdings in India's largest payment platform, converting its shares into convertible bonds for a Dutch company.
As per the announcement released by Paytm on the Indian National Stock Exchange, a subsidiary of Ant Group converted nearly half of its shares in the Indian payment company, Paytm, into convertible bonds on Monday. The deal, based on Paytm's closing price on August 4, comprises 10.3% of its shares, valued at approximately $628 million (45 billion yuan).
The announcement revealed that Resilient Asset Management B.V., wholly owned by Vijay Shekhar Sharma, acquired the shares from Ant Financial. After this transaction, the shares will be transferred from Ant Group's Dutch company, Antfin, to a Dutch group owned by Paytm's founder and CEO, Vijay Shekhar Sharma.
With this move, Ant Group will no longer be the top shareholder of Paytm, with its stake dropping to 13.5%. In contrast, Sharma's stake in Paytm will rise to 19.42%.
Transaction Details
The deal was conducted as a non-cash transaction, with no collateral, guarantees, or any other form of value assurance provided by Sharma. Sharma's Dutch offshore entity will issue optional convertible bonds to Ant Financial, which are long-term debts that can be converted into shares in the future.
Several analysts noted that this action reduces Paytm's exposure to Ant Group, making it more likely for the Indian firm to secure licenses in India. Moreover, the "offshore company convertible bond" transaction method also ensures flexibility in responding to future situations.
Following the announcement, Paytm's share price briefly surged 11.6% to a high of 887.55 rupees, later dropping to 848.25 rupees.
Regarding the transaction, Sharma expressed his pride in Paytm's achievements as a true champion of financial innovation in India and its significant impact on revolutionizing mobile payments and fostering financial inclusivity in the country. He also conveyed gratitude for Ant Financial's unwavering support and collaboration over the years.
A Glimpse at Paytm's Journey
Founded in 2010, Paytm, often referred to as the "Alipay of India," is the country's leading digital payment platform. It boasts over 300 million registered customers and 20 million merchants. As it has grown, its service range has expanded, evolving into a comprehensive financial services platform.
As early as 2015, Ant Group became a strategic investor in Paytm, holding a 25% stake, making it the largest shareholder. The collaboration accelerated Paytm's business expansion.
In November 2021, Paytm went public in India, raising 183 billion rupees (about 15.72 billion yuan at the time), marking the largest IPO in India's history. Behind its listing were several high-profile investment institutions, including Ant Group, which held a 29.6% stake through its overseas equity investment platform Antfin (Netherlands) Holding B.V. SoftBank Group and Alibaba Group held 19.6% and 7.2%, respectively. Additionally, BlackRock, Canada Pension Plan Investment Board, and Warren Buffett's Berkshire Hathaway were cornerstone investors in Paytm.
In recent years, while Paytm has been steadily reducing its losses, it has yet to turn a profit. According to its latest financial reports, in the first three quarters of 2022, Paytm reported quarterly losses of 6.4 billion, 5.7 billion, and 3.9 billion Indian rupees (equivalent to 560 million, 490 million, and 340 million yuan, respectively).
