Paytm’s Distress : When digital payments got a boost after demonetization in 2016, Paytm reached every home of the people. Paytm celebrated the date of 8th November and also launched its IPO on 8th November 2021. But at the same time, the Chinese companies which had invested heavily in Paytm started shrinking their hands and the layers of the company started opening up.
At the time of Paytm’s IPO, its largest shareholders were China’s Alibaba and Japan’s SoftBank. In such a situation, these two companies benefited the most from the listing of Paytm in the stock market. While the company’s founder Vijay Shekhar Sharma got Rs 402 crore from Paytm’s IPO, Alibaba Group got Rs 5,488 crore and SoftBank got Rs 1,689 crore. Ant Group’s shareholding of Rs 4700 crore was also included in Alibaba Group’s shareholding.
Paytm’s IPO was worth Rs 18,000 crore. In this, new shares worth only Rs 8,000 crore were issued. The remaining shares were put up for sale by its then investors. That means Alibaba and Ant Group, the largest shareholders of Paytm, started exiting it. 30% of the total size of the IPO came only from selling shares of Alibaba and Ant Group. Paytm’s bad days also started from here.
Paytm’s share falling
The era of Paytm, which launched the country’s biggest IPO at that time, started with its listing in the stock market. On the day of listing on November 18, 2021, its shares opened at Rs 1955, whereas by closing it came down to Rs 1564. In this way, it got listed at a loss of 27 percent compared to its IPO price of Rs 2150. Today, even though it has been more than 2 years since the company’s share price was listed, the company’s share price has not been able to match its IPO price even once.
After the decision of RBI, the decline in Paytm’s shares continues. The share price of the company closed at Rs 487.20 on Friday. There is a lower circuit in it for two consecutive days.
Where has Paytm gone in 2 years?
Now the attack on Paytm is not a sudden incident. In fact, this time bomb was burning for almost 2 years. The Reserve Bank of India had raised red flags regarding the money and transaction data traffic between Paytm Payments Bank and Paytm, but Paytm and Vijay Shekhar Sharma did not do anything to resolve it.
Even after this, RBI warned Paytm several times, but the management of Paytm did not take any action at the right time. Paytm did not make any changes regarding the top officers and decision makers of its payments bank. Vijay Shekhar Sharma overlapped the regulatory guidelines in order to make Paytm a big fintech company.
Mathematics of Paytm Payments Bank and Vijay Shekhar Sharma
RBI also expressed concern about the share holding pattern of Paytm Payments Bank. Paytm Company had 49% stake in Paytm Payments Bank, which is also known as One97 Communications. The remaining 51% stake was with Paytm Chief Executive and Founder Vijay Shekhar Sharma. In this way, it came to light that all the decisions related to Paytm Payments Bank were taken unilaterally and by Vijay Shekhar Sharma only.
China still has 9% stake
Chinese company Alibaba may have exited Paytm, but Ant Group has not gone out completely. Antfin (Netherlands) Holdings, a subsidiary of China’s Ant Group, holds 9.89 percent stake in Paytm. The company has invested in Alibaba as FDI. A major reason for RBI’s action on Paytm is said to be Chinese investment in it and its sharing of data with China.
Apart from this, Mauritius’ Safi Lee Mauritius Company Limited has 10.83 percent stake, Resilient Asset Management has 10.29 percent stake, SVF India Holdings (Cayman) has 6.46 percent stake, Saif Partners India has 4.60 percent stake among the companies investing as FDI. Is. While Canada Pension Plan Investment Guard as FPI took 1.77 percent stake, BNP Paribas also took 1.33 percent stake in Paytm.
At the same time, Vijay Share Sharma, the founder of Paytm, also has 9.11 percent stake in the company. While Axis Trustee Services Limited holds 4.88 percent shares and retail investors hold 12.85 percent shares.
Highlights-
- Digital Payments Giant’s Origin: Paytm, a symbol of digital payments, gained widespread popularity in India post-demonetization in 2016.
- Strategic IPO Launch: Paytm celebrated its success by launching its IPO on November 8, 2021, a significant date linked to the company’s journey.
- Chinese Investors’ Exit: As Paytm went public, major shareholders like China’s Alibaba and Japan’s SoftBank started reducing their investments, unraveling the layers of the company.
- IPO Benefits for Stakeholders: Founder Vijay Shekhar Sharma gained Rs 402 crore, while Alibaba and SoftBank reaped substantial amounts of Rs 5,488 crore and Rs 1,689 crore, respectively, from the IPO.
- Challenges Begin: Paytm’s IPO worth Rs 18,000 crore saw a significant portion being divested by Chinese investors, marking the onset of challenging times for the digital payment giant.
