A big block deal has been seen on the stock exchange in One 97 Communications (Paytm), a leading company in the fintech sector. About 1.92 crore shares, i.e. about 2.95% to 3% stake of the company, were traded on the block window of the National Stock Exchange (NSE). The deal was completed at a floor price of ₹1,535.10 per share, valuing it at approximately ₹2,948.94 crore (approximately ₹2,949 crore).
After this big transaction, the discussion spread rapidly in the market whether Paytm founder and CEO Vijay Shekhar Sharma has withdrawn money from the company by reducing his stake? However, the financial structure behind this deal is completely different.
Did Vijay Shekhar Sharma sell his shares?
Technically this sale is a 100% owned overseas entity of Vijay Shekhar Sharma. Resilient Asset Management BV (Resilient Asset Management BV) Has been done by. But this does not at all mean that Vijay Shekhar Sharma is withdrawing cash by selling his personal stake.
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No impact on direct stake: Vijay Shekhar Sharma's Paytm Direct shareholding of 9.03% Remains completely safe and unchanged.
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Who will the money go to: According to exchange filings and regulations, the entire economic value and funds to be received from this ₹2,949 crore sale of the company linked to China's Ant Group Antfin (Antfin Holding BV) It will go to the account of Vijay Shekhar Sharma, not to Vijay Shekhar Sharma.
What is the Antfin and OCD agreement of 2023?
To understand the reality of this deal, it is important to understand the major restructuring that took place in August 2023:
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In view of the stringent rules and FDI protection on Chinese investment in India in 2023, Antfin had transferred its 10.30% stake to Vijay Shekhar Sharma's company 'Resilient Asset Management'.
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In return, Resilient issued 'Optionally Convertible Debentures' (OCDs) to Antfin.
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Under this arrangement, the voting rights and ownership came to Resilient (Sharma), but the economic value of the shares remained with Antfin.
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Now this share sale by Resilient is actually a pre-planned process to cash out the same old investment of Antfin and gradually reduce the foreign stake.
Main points and size of block deal (Deal Structure)
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Number of shares traded: About 1.92 crore shares.
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equity stake: Around 2.95% to 3%.
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Deal Price (Price Per Share): ₹1,535.10 per share (about 2.9% discount to the previous closing price).
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Total Base Deal Value: Approximately ₹2,949 crore.
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Upsize Option: According to reports, it also includes an option to sell an additional 1.98% stake (about 1.27 crore shares), taking the total deal size to 4.98% and the value to above ₹4,895 crore.
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Lock-in Period: There will be a lock-in period of 90 days after this transaction, so that there is no pressure of immediate dumping of new shares in the market.
Will this money come to the account of Paytm company?
No, this is a secondary market transaction (Secondary Share Sale). In this, the existing shares have passed from one hand to another institutional buyer. The company has not issued any new shares, so no new cash will be added to Paytm's balance sheet nor will the shareholding of existing investors be diluted.
What effect will this have on investors and shares?
In the short term, due to huge influx of shares in the market, there may be slight supply overhang and fluctuations in the stock. However, in the medium to long term analysts view it as positive because:
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The stake of the old foreign/Chinese promoter Antfin in the company is being reduced rapidly, thereby reducing the regulatory risks.
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These shares are being bought by domestic and global institutional investors (DIIs/FIIs), thereby strengthening the shareholding base.
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There is no negative impact of this share sale on the fundamental financial results and core business operations of the company.