Fintech
Adani’s acquisition of Paytm will redefine equations in the Indian fintech sector
Adani is in talks to acquire Paytm!
Adani Group is reportedly targeting a stake in Paytm’s parent company One97 Communications Limited (OCL). Sources familiar with the matter revealed that Paytm CEO Vijay Shekhar Sharma recently visited Adani’s office in Ahmedabad to discuss this potential deal.
However, Paytm has just released an official statement refuting all claims related to Adani Group’s acquisition of Paytm.
“We hereby clarify that the above mentioned news is speculative and the company is not engaged in any discussion in this regard. We have always provided and will continue to provide information in accordance with our obligations under the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015,” Paytm said in an official statement.
Some media outlets also report that Sharma has no plans to sell his personal stake in One97 Communications.
Vijay Shekhar Sharma owns about 19% of One97 Communications, which amounts to Rs 4,218 crore based on Tuesday’s stock price of Rs 342 per share. This suggests a potential strategic partnership rather than a full acquisition.
Other major shareholders of Paytm include Saif Partners, which holds a 15% stake; Antfin Netherlands (founded by Jack Ma), which holds 10%; and the company’s directors, who collectively own 9%.
Interestingly, the news of Paytm’s potential acquisition has evoked a positive reaction in the market. Paytm shares rise 5% at the opening of the BSE, trading at Rs 359.55 at 9.21 am on May 29, 2024.
Adani Paytm Acquisition: Gain Competitive Advantage
One97 Communications has faced challenges since The RBI has banned its Paytm Payments Bank Limited (PPBL). Industry analysts have speculated that an acquisition could be the only lifeline for Paytm, with Reliance emerging as a likely suitor given its efforts to strengthen Jio Financial, a newcomer to India’s fintech sector.
However, how The Adani Group is preparing to venture into the e-commerce and digital payments arenathe news has electrified speculation about a potential Paytm acquisition.
If Adani Group successfully acquires a stake in One97 Communications, it would undoubtedly gain a competitive advantage over Reliance Jio Financial, Google Pay and PhonePe. As of March 2024, Paytm boasts 9.6 million Paytm monthly transaction (MTU) users. Adani already has millions of customer data points considering its diverse portfolio spanning marine, airports, electricity, mining, food, weapons and infrastructure.
Reports indicate that Adani and Sharma have been engaged in discussions for a considerable period of time. Their recent meeting was focused on finalizing the intricate details of the deal. In addition to the discussions, Adani is actively targeting West Asian funds to attract investors to One97 Communications, recognizing its current financial challenges.
Due to regulatory bottlenecks, Paytm’s revenue fell 3% to ₹2,267 crorewhile net loss increased 228% year-on-year to ₹550 crore during Q4FY24. As a strategic response, the fintech firm has has withdrawn the application for the general insurance authorization and moved exclusively to providing insurance distribution services.
The Indian fintech sector is estimated to represent a $2.1 trillion opportunity 2030. As the industry continues to evolve, Adani Group’s potential acquisition of Paytm could give competitors a run for their money. With Paytm’s large user base and Adani’s huge reach, they are not just gamers; they are turning points. Together, Adani and Paytm have the power to completely overhaul financial services, offering Indian consumers a completely new way to manage their money and revolutionizing the way business is done in India.