Alibaba’s Antfin Set to Reduce Stake in Paytm

In a significant move within the fintech landscape, Antfin (Netherlands) Holding B.V., a subsidiary of the Chinese e-commerce behemoth Alibaba Group, is poised to offload up to 4% of its investment in Paytm, valued at around ₹2,066 crore. According to insider sources, this divestment is expected to occur through block deals at a floor price of ₹809.75 per share, reflecting a 6.5% discount compared to Paytm’s closing stock price on May 12.

Antfin’s Current Stake in Paytm

As of the conclusion of the March quarter, Antfin held an approximate 9.85% stake in One 97 Communications, the parent company of Paytm. This strategic adjustment indicates a shift in investment strategy amid fluctuating market conditions.

Paytm’s Financial Performance in Q4

On May 6, Paytm shared its fiscal fourth-quarter results, revealing a reduction in losses to ₹539.80 crore, compared to a loss of ₹549.60 crore during the same period in FY24. However, when viewed sequentially, the company’s losses expanded from ₹208.3 crore in the previous December quarter. This increase was attributed to a one-time employee stock option cost that impacted earnings.

Notably, Paytm achieved an EBITDA before ESOP profitability of ₹81 crore. The company’s profit after tax also showed signs of recovery, with losses narrowing to ₹23 crore when excluding the ₹522 crore one-time ESOP charge.

Optimistic Outlook from Paytm’s Leadership

During a press conference following the earnings report, Vijay Shekhar Sharma, Paytm’s Founder and CEO, expressed optimism about the company’s trajectory. He stated, “We are on the brink of achieving profitability after tax… I firmly believe that if trends continue as they have been, the next quarter could very well show a profit.”

Summary and Future Implications

• Antfin is divesting 4% of its Paytm stake for ₹2,066 crore.
• The sale price reflects a 6.5% discount off the recent stock closing.
• Paytm’s financial report shows a reduction in losses and potential for future profitability.
• Leadership remains optimistic about upcoming quarters.

This strategic divestment from Antfin, coupled with Paytm’s encouraging financial indicators, marks a pivotal moment in the ongoing evolution of the fintech sector. As investors keep a close watch, the next few quarters will reveal whether Paytm can sustain its momentum towards profitability.