Goldman Sachs, BNP Paribas among investors buying 3% Paytm stake for Rs 2,949 crore

A group of prominent global and domestic institutional investors, including Goldman Sachs, BNP Paribas and Societe Generale, acquired a 3 per cent stake in Paytm parent One97 Communications Ltd for nearly Rs 2,949 crore through open-market transactions on Tuesday.

According to block deal data available on the National Stock Exchange, investors collectively purchased 1,92,10,110 equity shares of the Noida-headquartered fintech company at an average price of Rs 1,535.10 per share.

The transactions were valued at Rs 2,948.94 crore and represented approximately 3 per cent of One97 Communications’ equity.

Global funds join transaction

Apart from Goldman Sachs, BNP Paribas and Societe Generale, several international investment firms participated in the transaction.

These included Ghisallo Capital Management, Oxbow Capital Management, North Rock Capital Management, Viridian Asset Management and Integrated Core Strategies (Asia) Pte Ltd.

Vittoria Fund-OC, a hedge fund owned by Pathstone Family Office LLC, was also among the buyers.

The participation of several global institutional investors came as a substantial block of Paytm shares changed hands following an announcement about a planned stake sale by an entity owned by company founder Vijay Shekhar Sharma.

Indian mutual funds buy shares

Several major domestic institutional investors also used the transaction to acquire shares in the fintech company.

SBI Mutual Fund, Aditya Birla Sun Life Mutual Fund, HDFC Mutual Fund, Kotak Mahindra Mutual Fund, HSBC Mutual Fund, Sundaram Mutual Fund and Tata Mutual Fund were among the domestic buyers.

Insurance companies also participated, with ICICI Prudential Life Insurance Company and Tata AIA Life Insurance purchasing Paytm shares.

The presence of mutual funds, insurers, hedge funds and other foreign institutional investors resulted in the 3 per cent stake being distributed among a broad group of buyers.

Resilient sells shares

On the selling side, Resilient Asset Management BV offloaded 1,92,10,110 shares at the same average price of Rs 1,535.10 apiece, NSE block deal data showed.

The transaction followed Paytm's disclosure on Monday that Resilient Asset Management, an entity owned by founder Vijay Shekhar Sharma, intended to sell up to a 4.98 per cent stake in One97 Communications through a block deal.

However, the economic structure behind the holding means that proceeds from the stake sale will not accrue to Sharma.

Under an existing Optionally Convertible Debenture arrangement, the proceeds will instead be retained by Antfin, an affiliate of China's Ant Group.

Antfin arrangement in focus

The arrangement originates from an earlier transaction through which Antfin transferred its direct shareholding in One97 Communications to Resilient Asset Management.

Antfin had transferred a 10.3 per cent direct stake in the Paytm parent to Resilient Asset Management at a total valuation of $628 million. While the shares were transferred, Antfin retained economic rights over the holding through the debenture arrangement.

The structure consequently reduced Antfin's direct shareholding while preserving its economic interest in the shares.

Tuesday's sale represents another step in the evolution of the ownership structure of One97 Communications following that transaction.

Paytm shares fall 2%

Despite substantial institutional participation in the block transaction, One97 Communications shares ended Tuesday's session lower.

The stock declined 2.15 per cent to close at Rs 1,546.30 on the NSE, slightly above the Rs 1,535.10 average price at which the block transactions were executed.

The scale of Tuesday's deals nevertheless makes the transaction significant for Paytm's shareholder base, with a large block of shares moving into the portfolios of multiple domestic and international institutional investors.

The transaction also comes as Paytm continues to rebuild its business following regulatory challenges over the past few years, while attempting to strengthen its payments and financial-services operations.

With Goldman Sachs, BNP Paribas, Societe Generale and several leading Indian mutual funds among the buyers, the 3 per cent stake previously held through Resilient Asset Management has now been dispersed among a substantially wider institutional investor base.