Ant Financial, affiliated with Alibaba Group, is a potential seller in the Paytm block deal that dragged the stock down sharply
Shares of Paytm owner One97 Communications Ltd fell further in the early hours of Friday, a day after it witnessed a series of block deals. According to NSE data, China's Alibaba Group has sold about 3 per cent stake in the company through a block deal for Rs 1,031 crore.
Alibaba.com sold 1.92 crore shares at Rs 536.95. While Morgan Stanley Asia bought 5.5 million shares, Ghisalo Master Fund bought 4.98 million shares. There is no information about the buyers of the rest of the shares.
Alibaba Group firm Ant Financial, however, has not diluted its stake in Paytm and continues to hold around 25 per cent in the company. Alibaba had a 6.26 per cent stake in the firm as of September 2022.
On Friday, the stock fell 1.7 per cent to Rs 533 per share in opening. After the deal, it fell by 9 per cent on Thursday. It had traded in the green in 12 of the last 14 sessions since December 26 and had gained 15 per cent during this period.
Alibaba has earlier sold shares in BigBasket and Zomato. In November, SoftBank Group sold 29 million shares of Paytm, or a 4.5 percent stake worth about $200 million, through a block deal.
According to Goldman Sachs calculations, Antfin Netherlands Holding had acquired shares at an average cost of Rs 300 per unit between 2015 and 2019. It had invested in Paytm in 2015 at an average cost of acquisition of Rs 330 and held a 6.26 per cent stake at the end of September.
On January 9, Paytm told the exchanges that it disbursed 3.7 million loans worth Rs 3,665 crore in December, up 330 per cent year-on-year. For the December quarter, its total disbursements grew by 357 per cent to Rs 9,958 crore. Monthly transacting users grew 32 percent to 85 million in December from 65 million a year ago. The gross trade value processed through the platform grew 38 per cent year-on-year to Rs 3.64 lakh crore in December.
The digital payments company also added one million payment instruments during October-December and the number of merchants paying for payment instruments has reached 5.8 million by December 2022.
The company's consumer engagement on the Paytm Super app was up 32 per cent year-on-year with 85 million users doing average monthly transactions for the quarter ending December 2022.
The Paytm board had in December approved buyback of shares worth Rs 850 crore ($103 million) through the open market. The number of shares bought back will be 10.5 million at a maximum repurchase price of Rs 810 each, representing 1.6 per cent of the paid-up share capital. Paytm has $1.1 billion in cash and $127 million in cash outlay for buybacks through September 2022.
"We expect it to write off $33 million over the next three quarters before breaking Adj Ebitda in 2QFY24. We expect the buyback announcement at a 50 per cent premium to provide support to the stock price in the near term. In cash The buyback offset by the reduction in share count keeps our price target unchanged, JPMorgan said in its December 14 note to investors.
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