Paytm’s subsidiary One97 Communications Singapore has sold its stock acquisition rights (SARs) in Japanese digital payments firm PayPay Corporation for INR 2,364 Cr ($279.19 Mn) to SoftBank’s Vision Fund 2
The transaction, which is expected to close within this month, will value PayPay at $7.06 Bn
Paytm said that it is working on AI-powered features to accelerate PayPay’s business in Japan
Fintech major Paytm’s subsidiary One97 Communications Singapore has sold its stock acquisition rights (SARs) in Japanese digital payments firm PayPay Corporation for INR 2,364 Cr ($279.19 Mn) to SoftBank’s Vision Fund 2.
The transaction, which is expected to close within this month, will value PayPay at $7.06 Bn, Paytm said in an exchange filing.
The company said that its subsidiary’s board approved the sale of the SARs as it has created significant value for the company. With this, Paytm’s cash reserves will get an INR 2,364 Cr jolt, which it will look to drive future business initiatives.
“We remain fully committed and will continue to support PayPay’s product and technology innovations in future. We are working on introducing new AI-powered features to accelerate PayPay’s vision in Japan,” a Paytm spokesperson said.
Pertinent to mention that the stake sale is about 12% higher than the $250 Mn previously estimated by reports yesterday. Hours after the stake sale was first reported, Paytm clarified to the bourses that its Singapore subsidiary’s board approved sale of SARs in PayPay Corporation.
For the uninitiated, SARs are options/ warrants that give the holder the right to sell securities in the issuing company. These are generally issued as part of a company’s equity-based compensation plan.
Paytm held SARs in the Japanese company as it was one of the major figures in its inception. PayPay was founded in 2018 via a collaboration between Softbank, Yahoo Japan, and Paytm. It offers smartphone payment services using barcodes (QR Codes), similar to Paytm. The Tokyo-based company claims to have a user base of 65 Mn.
Paytm held SARs amounting to 7.2% equity stake in PayPay as of March 31, 2021.
This will be the second time that Paytm will be boosting its cash reserves this fiscal. Earlier in August, it sold its events and ticketing arm Paytm Insider to Zomato for $241.8 Mn (INR 2,048 Cr).
The company’s cash balance at the end of the second quarter of FY25 stood at INR 9,999 Cr, up over 23% from INR 8,108 Cr at the end of the preceding June quarter.
In recent times, Paytm’s founder and CEO Vijay Shekhar Sharma has been bullish on expanding the company’s core business of consumer payments. In October, Sharma had said that the company will look to reinvest in the consumer payments business area.
However, it is yet to ascertain the types of investments that Paytm will be making. In the last month, Paytm launched new features like UPI Lite Auto Top-Ups, UPI International in select overseas markets and UPI Statement download option.
Shares of Paytm ended yesterday’s trading session 2.02% higher than previous close at INR 975.80.
