An off-market transfer would be used to buy a 10.3% interest in Paytm from Antfin by a foreign company owned by Jai Shekhar Sharma.
At the time of the transaction’s completion, Sharma’s ownership of Paytm will rise to 19.42 percent, while Antfin’s ownership would decline to 13.5 percent. Vijay Shekhar Sharma, the founder and CEO of One 97 Communications Limited, and Antfin have reached a deal wherein Sharma would buy a 10.3% share in Paytm, the business announced to the markets on 7 August.
Sharma and the promoter companies would become Paytm’s largest shareholders as a result of the acquisition.
Resilient Asset Management B.V, a foreign company that Sharma owns 100% of, would buy Antfin’s share in Paytm through an off-market transfer, according to the filing. At the time of the transaction’s conclusion, Sharma’s ownership of Paytm will rise to 19.42 percent, while Antfin’s ownership would decline to 13.5 percent.
Paytm’s share soared more than 10% from its previous closing as a result of the news. The stock was trading at Rs 851 on the National Stock Exchange at ten in the morning.
This structure, in which Sharma and Ant Financial divide ownership and economic rights, is intriguing. Certain covenants about timelines and violations are included in agreements of this nature. According to a source familiar with the situation, those covenants are not yet known to the general public.
This action significantly lessens the Chinese hangover. Additionally, it conveys to regulators that Sharma is completely in charge. “Since VSS is now the only stakeholder, this also serves to ring-fence the firm from any hostile offer. Elevation Capital implicitly supports Vijay, and since they jointly hold more than 30% of the business, they have sufficient control over it, the person continued.
Sharma reportedly informed the RBI and market watchdog Sebi about the decision and has been traveling often to Mumbai over the past several months. It will be interesting to observe if this results in more confidence in the regulator. Paytm has always denied that the Chinese ownership or influence in the business was under any kind of pressure from regulators or the government.
Resilient will gain ownership and voting rights of the 10.30 percent block in accordance with the terms of the agreement signed by the parties, the firm said in a statement. Resilient will provide Antfin with Optionally Convertible Debentures (OCDs) as payment for the 10.30 percent stake, allowing Antfin to keep the economic value of the stake and show its continued faith in the company’s potential, the statement said.
Currently, Antfin owns 23.79 percent of Paytm, however, following the deal, Antfin will no longer be the company’s largest stakeholder. Additionally, there isn’t an Antfin nominee on the Paytm Board.
