Vijay Shekhar Sharma, the Founder and Chief Executive Officer of One 97 Communications Limited, the parent company of Paytm, is set to become the largest shareholder in the renowned fintech major. In a strategic move, an overseas entity wholly owned by Sharma, Resilient Asset Management B.V., will acquire a substantial 10.3 percent stake in Paytm from Antfin, a company affiliated with Chinese tech giant Alibaba. The off-market transfer, announced on August 7th, will bolster Sharma’s shareholding to 19.42 percent, while Antfin’s stake will decrease to 13.5 percent.
The announcement of Vijay Shekhar Sharma’s increased stake in Paytm propelled the company’s shares to surge by over 10 percent from the previous close. As a result, the stock reached Rs 851 on the National Stock Exchange at 10 am.
This strategic acquisition assumes significance due to the ongoing concerns raised by Indian regulators about large Chinese shareholding in domestic companies, especially in the financial services sector. In recent years, the Indian government has been closely scrutinizing Chinese investments and even banning over 200 Chinese apps. As a result, Paytm, a major player in India’s financial services space, faced delays in receiving certain approvals due to its Chinese ownership.
By taking over a significant portion of the stake held by Antfin, Vijay Shekhar Sharma aims to reduce the Chinese hangover and assert control over the company. This move makes him the single largest shareholder in Paytm, providing him and his promoter entities, including Elevation Capital, a total ownership of over 30 percent in the company. The enhanced control reinforces Paytm’s resilience against any potential hostile bids.
The VSS takeover adopts an intriguing structure wherein Sharma and Ant Financial (a subsidiary of Alibaba and parent company of Antfin) share ownership rights and economic rights. The finer details of this arrangement, including timeline and breach covenants, remain undisclosed.
While the immediate impact of this transaction diminishes Chinese influence in Paytm, the regulatory implications of the increased control remain to be seen. Vijay Shekhar Sharma has reportedly engaged with the Reserve Bank of India (RBI) and market regulator SEBI to discuss the move, but further clarity on regulatory sentiment is awaited.
As Paytm’s payment gateway business, Paytm Payments Services Limited (PPSL), seeks approval from the Indian government for investment by One97 Communications, the company continues to pursue its online payment aggregation business. Although RBI has asked PPBL to stop onboarding new customers, the company’s business and revenues have not been significantly impacted.
The strategic acquisition by Vijay Shekhar Sharma comes at a time when other shareholders have been exiting Paytm. Earlier this year, Alibaba Group sold its remaining stake in Paytm for approximately Rs 1,378 crore. Similarly, SoftBank has been gradually offloading shares through open market transactions, generating over $200 million in profits.
Despite the challenges posed by the pandemic, Paytm reported impressive financial performance for the June quarter. The company recorded a 39.4 percent growth in revenue, reaching Rs 2,341 crore, while simultaneously reducing losses by 45 percent compared to the previous year.
The acquisition of the 10.3 percent stake in Paytm by Vijay Shekhar Sharma reinforces his commitment to the company’s growth and resilience, while also addressing regulatory concerns. As Paytm continues to evolve under his leadership, the fintech major is poised to maintain its status as a true champion of made-in-India financial innovation.
