Paytm stock jumps 11.6% on news of Sharma’s stake purchase

Vijay Shekhar Sharma, founder and CEO of Paytm / Photo credit: Tech in Asia

Vijay Shekhar Sharma, the founder and CEO of One97 Communications, has entered into an agreement with Ant Financial to buy the latter’s 10.30% stake in the Indian company. The value of the 10.30% stake was estimated to be US$628 million as of August 4.

The move was announced by Paytm, the payments platform operating under One97 Communications, on Monday. The purchase will be made via Sharma’s owned overseas entity, Resilient Asset Management BV.

With this, Sharma’s ownership of Paytm will increase to 19.42%. Ant’s ownership, on the other hand, will drop to 13.5%.

The sale would help alleviate pressure from investors, who had been concerned over a potential share sell-off by Ant Group, and address concerns from rising India-China tensions, The Straits Times noted.

The stock price of Paytm has since jumped 11.6% to 887 Indian rupees (US$10.7) apiece as of earlier today.

In February, it was reported that Ant Group was mulling selling part of its stake in Paytm, which had exceeded 25% at the time. However, sources told Bloomberg that the potential sale was not driven by political reasons.

“I am proud of Paytm’s role as a true champion of made-in-India financial innovation and our achievements in revolutionizing mobile payments and contributing to formal financial services inclusion in the country,” Sharma said in a post.

Founded in August 2010, Paytm started by providing prepaid mobile recharges but has since expanded into areas like ecommerce, banking, and insurance.

Earlier this year, after the company narrowed its losses from US$94 million to US$47 million, Sharma said its next milestone was to generate free cash flow.

See also: Paytm looks to turn things around with focus on cash flow

Currency converted from Indian rupee to US dollar: US$1 = 82.7 rupees.