Rahul Jain on how VSS AntFin deal will prove to be good for Paytm

economictimes.indiatimes.com:

Rahul Jain, VP Research, Dolat Capital, says it takes away the risk of hostile transaction possibilities in case AntFin stake is purchased by one single entity as they own close to 25% at that point of time. With this deal, AntFin, an affiliate of China’s Ant Group Co, will cease to be the largest shareholder in Paytm. Also, Paytm’s payment services license was pending for approval for more than six months now and the constraint was related to Chinese ownership.Paytm CEO Vijay Shekhar Sharma will purchase 10.30% stake from AntFin Holding. Do you think this is just technically a book entry where the ownership from the right-hand moves to the left-hand?I would say this helps in multiple ways.

This talks about the relationship and support they have from AntFin. And from a clear business point of view, it takes away the risk of hostile transaction possibilities in case AntFin stake is purchased by one single entity as they were owning close to 25% at that point of time. With this deal, AntFin, an affiliate of China’s Ant Group Co, will cease to be the largest shareholder in Paytm.

So those kinds of risks are out. Secondly, even from the point of view of some of the regulatory challenges, their payment services license is pending for approval for more than six months now, where the constraint was also related to Chinese ownership. Essentially those kinds of challenges may see a better continuity going forward after this transaction.