Vijay Shekhar Sharma-Antfin deal: Chinese shareholder reducing stake in Paytm a fundamentally positive, say analysts

livemint.com:

Paytm announced that Sharma entered into an agreement to purchase a 10.30% stake in the company from Antfin (Netherlands) Holding BV. Antfin will transfer 6.53 crore shares of Paytm to Resilient Asset Management B.V., an entity in which Sharma owns the complete 100% stake.

With this, Vijay Shekhar Sharma will increase his holding in Paytm to 19.42%, becoming the largest shareholder in the fintech giant, while the stake of Antfin, an affiliate of China’s Ant Group Co, will drop to 13.5%. Read here: Vijay Shekhar Sharma to become largest shareholder in Paytm after buying 10.30% stake from Antfin Holding Analysts at BofA Securities noted that a Chinese shareholder ceasing to be the largest shareholder, would also directionally be positive for the company fundamentals.

“We consider this announcement to be positive as it removes overhang on the stock from the risk that Antfin in future may look to reduce its stake leading to more supply. Furthermore, Sharma buying the stake at Friday's close indicates his confidence in the story with a “skin in the game" approach," BofA said in a report.

This event also reduces risk that some other strategic investor coming who would have a major stake similar to that of Sharma, it added. Moreover, analysts believe a Chinese shareholder (Antfin) ceasing to be the largest shareholder, would also directionally be positive for the company fundamentals.

Also Read: Ant transfers 10.3% in Paytm to Sharma The Reserve Bank of India (RBI), in November 2022, had declined Paytm Payments Services Ltd’s (PPSL) application to operate as a payment aggregator and it gave it 120 days to reapply for the license. Until it gets an approval, the company, which is a wholly owned subsidiary of Paytm, has been asked