Ant Group and SoftBank to Offload Shares in Paytm Through a Block Deal to Exit from Digital Payments Company

SoftBank and Ant Group are to sell their shares in Paytm through a block deal in the market in order to exit from the digital payment company.

Written by: Arjita Gupta

Edited by: Krutarth Ghosalkar

Last Updated: February 27, 2023

Through a block deal, Ant Group (backed by Jack Ma, a billionaire) and Japan’s SoftBank Group Corp have talked about selling stakes in Paytm brand’s One97 Communications, a digital financial service company. Investment banks and shareholders representing SoftBank and Ant Group have previously approached Sunil Mittal, chairman and founder of Bharti Airtel with a proposal to buy stakes in their firm. But the discussion did not meet any end conclusion for the deal.

SoftBank Group Corp and Ant Group are planning to exit the arena of the digital payment company by gradually offloading shares in the market. Ant Group is the largest shareholder in the fintech company in question, where last year December, it held 24.86% of One97 Communications shares, which increase more than 25% when the repurchase decreased the outstanding number of shares. Elevation Capital and SoftBank on the other hand, hold around 15% and 13% of Paytm shares, respectively.

On 13 February, Ant Group had a window period of 90 days to cut their stake on completing the buyback. In December, One 97 announced around Rs. 850 crores worth of buyback. And in this month, Alibaba Group, a giant Chinese e-commerce station, sold its 3.3% shares of direct stake for Rs. 1,378 crores in One97 Communications in an open market transaction. Since its dismal listing at the end of 2021 (November), Paytm has been under the pressure to generate profits. Their stock was reduced by 70% in the listing, and the previous year, they declined by 60%.

However, signs of profits emerged as Paytm shares took a surge by 40% from the unfortunate low in November. After narrowing their third-quarter loss, their initiative to expand the customer base enhanced the revenue, as per what the company said in February during the exchange. Paytm also said that in the next 12 to 18 months, they will become free cash flow positive, as per their comments last year.

The digital payment company has earlier never traded its IPO beyond the price of Rs. 2,150 from the time of the November 2021 listing. It went through a steep plunge in the first-year share this time in midst of large IPOs as compared to the last decade. Paytm is otherwise backed by Ant Group of China and SoftBank. The company is attracting more customers with its diverse product offering. Paytm is also in pursuit to win investors by showing their earnings potential.