Sharma, who established Paytm in August 2010, currently owns 19.3% of the company.
Vijay Shekhar Sharma, founder, and CEO of fintech startup One97 Communications, will buy a 10.30% interest in Paytm from Antfin (Netherlands) Holding BV in an off-market transaction.
The transaction transforms One97 Communications, which operates under the Paytm moniker, from a corporation dominated by Chinese companies to a firm dominated by Indians.
Antfin will retain the economic rights to the share being transferred to Sharma.
According to the agreement, Sharma would acquire 10.3 percent of Paytm from Antfin through his 100% owned foreign organization Resilient Asset Management BV, making him the company’s top stakeholder with a total interest of 19.42 percent.
Before the purchase, Sharma owned little more than 9% of Paytm.
“As a result, no cash payment is going to be made for this acquisition, and no pledge, guarantee, or other value assurance will be given by Sharma, either directly or indirectly,” the statement reads. according to a BSE filing.
Antfin’s ownership in Paytm would fall from 23.8 percent to 13.5 percent as a result of this transaction.
There would be no change in Paytm’s management or control as a result of this transaction since Sharma would continue as Managing Director and CEO, and the present board would remain in place.
There is also no Antfin nominee serving on the Paytm board of directors. Antfin is a subsidiary of the Ant Group Co. of China.
“As we announce this change in ownership, I’d like to express my heartfelt appreciation to Ant for their unwavering support and partnership over the years,” Sharma added.
Antfin controlled 29.6 percent of Paytm at the time of its offering, and it was forced to reduce its investment to less than 25% to achieve regulatory compliance.
In January and February, Alibaba Group sold its whole 6.26 percent investment in the company, but group firm Antfin remained the company’s largest stakeholder, with a close to 25% ownership.
The Antfin deal occurred at a price of around $795 per share, which is roughly one-third of the Paytm IPO listing price of $2,150 per share.
“This is a big win for Paytm because Vijay Shekhar Sharma, the company’s founder, is increasing his commitment to the company significantly.” Second, any unloading of at least 10.3 percent of the market’s shares by Antfin, which was considered a Chinese financial investor, will be lifted,” InGovern Managing Director Shriram Subramanian said.
He also stated that the new structure keeps the company’s control below the 25% SAST (Substantial Acquisition of Shares and Takeovers) level.
“We believe that a Chinese shareholder (Antfin) ceasing to be the largest shareholder would also be directionally positive for the company fundamentals,” stated research analysts Sachin Salgaonkar and Anand Swaminathan in a BofA securities note.
According to BofA, the Reserve Bank of India (RBI) denied Paytm Payments Services Limited’s (PPSL) application to function as a payment aggregator in November and gave it 120 days to resubmit.
“The company, which is an entirely owned subsidiary of Paytm, was asked not to enlist new online merchants until it gets approval.” According to the media, this was done to allow PPSL time to comply with FDI standards.”We do not anticipate such worries in the future,” the report concludes.