Paytm, a digital payments and financial services firm saw an increase in stake from Chinese investor Ant Financials and domestic mutual fund players following a recent buyback.

According to a regulatory filing that updated the company’s shareholding pattern, Ant Financial’s holding in Paytm rose slightly from 24.86% as of December 31, 2022, to 25.47% at present.

The updated shareholding pattern indicates that mutual funds have increased their position in the company since December 2022, with their stake rising from 1.73% to 2.68%.

Despite the increase in stake, Ant Financials’ number of shares in Paytm remains unchanged. The company still holds 161.4 million shares in Paytm, which is the same as the number of shares it held before the buyback. As per SEBI regulations, there is a 90-day window from the date of the buyback’s closure to lower the stake below 25%.

Alibaba, the Chinese e-commerce company, has completely divested its 6.26% stake in fintech startup giant Paytm. The stake was sold in two tranches, one in January and the other in February of this year.

Paytm recently concluded its share buyback program worth Rs 850 crore earlier this month. On February 13, the company notified the exchanges that it had repurchased 15.57 million equity shares, which represents 2.4% of the total number of outstanding shares, at a weighted average price of Rs 545.93 per share. Consequently, the percentage stake of remaining shareholders will increase on a proportionate basis, while the absolute number of shares held by them will remain the same.

After the shares repurchased through the buyback were extinguished, Paytm’s share capital base was reduced by 15.57 million shares (equivalent to 2.4%) to 633.77 million shares.

Although the large shareholders still own the same number of shares, their respective stakes have increased. Softbank’s stake has increased from 12.92% to 13.24%, while Elevation Capital, through two entities that own more than 1%, now holds a 15.45% stake in Paytm.

The domestic institutional shareholding in Paytm has increased by 1.11% due to an increase in the shareholding of mutual funds and alternative investment funds.

On the other hand, foreign institutional shareholding has decreased from 72.8% to 71.9%. While foreign direct investment (FDI) shareholding has also reduced, foreign portfolio investor (FPI) Category 1 shareholding has increased from 6.7% to 10.6%, representing a 3.9% increase.

Moreover, Alibaba has completely divested its 6.26% stake in Paytm. The Chinese e-commerce company sold its stake in two tranches, one in January and the other in February of this year.

Paytm has witnessed a significant improvement in its performance metrics in recent times, leading several brokerage houses to rerate the company. Global brokerage firm Macquarie, for instance, has upgraded the stock to ‘outperform’ from ‘underperform’, doubling the target price and citing a visible change in management’s approach.

In its Q3FY23 results, Paytm achieved operating profitability, surpassing its September 2023 guidance. The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) before employee stock ownership plan (ESOP) costs stood at Rs 31 crore, with an EBITDA margin of 2% of revenues compared to a negative 27% a year ago. The fintech giant’s revenue from operations rose by 42% YoY to Rs 2,062 crore, driven by growth in its core payments business as well as sustained momentum in its credit and commerce businesses.