One97 Communications responded to a media report on May 29 that said Adani Group chairman, Gautam Adani, is likely considering acquiring a stake in Paytm’s parent company.
“We hereby clarify that the abovementioned news item is speculative and the company is not engaged in any discussions in this regard. We have always made and will continue to make disclosures in compliance with our obligations under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015,” said the company in an official statement.
Paytm shares hit the 5 percent upper circuit in early trade on May 29.
What did the report say?
Adani Group Chairman Gautam Adani is keen on a stake in One 97 Communications, which runs mobile wallet Paytm, reported Times of India. Paytm, however, denied any such development.
Paytm founder and CEO Vijay Shekhar Sharma met the Adani Group chief on May 28 at its Ahmedabad headquarters to “finalise the contours of a deal”, said the TOI report.
If the ports-to-airports conglomerate enters the fintech market, it will compete with companies like Google Pay, Walmart-owned PhonePe, and Mukesh Ambani’s Jio Financial, if the two first-generation entrepreneurs are successful in their deal. It will also be one of Adani’s big purchases after Ambuja Cements and NDTV.
Sharma holds almost 19 percent of One 97, which is valued at Rs 4,218 crore at the closing price of Rs 342 per share on May 28. Sharma individually owns 9 percent of Paytm and indirectly owns 10 percent through the overseas company Resilient Asset Management. According to One 97’s filings with stock markets, Sharma and Resilient are both identified as public shareholders, the report added.
On January 31, the RBI imposed business restrictions on the Paytm Payments Bank (PPBL) citing repeated violations of norms and non-compliance with multiple rules. The banking regulator barred PPBL from accepting fresh deposits and doing credit transactions after February 29.
In March 2024, PPBL was not allowed to onboard new clients. The most recent action was taken in response to an audit report that said that the bank had “persistent non-compliances and ongoing material supervisory concerns”. Since the RBI’s move, shares of Paytm have eroded more than 50 percent of investors’ wealth.
The woes for the fintech firm seem relentless as reports suggested one of its key lending partners, Aditya Birla Finance, invoked loan guarantees due to repayment defaults from customers on May 8.
Apart from Aditya Birla Finance, other lenders such as Piramal Finance and Clix Capital also pulled the plug on their partnerships with Paytm after RBI barred Paytm Payments Bank from operations, reports said.
Therefore, the partnership with the Adani Group comes at an opportune moment for the beleaguered fintech major.
The Adani Group has been in the news once again, albeit for positive reasons.
Earlier this week, six Adani Group stocks, including Adani Enterprises, Adani Green Energy and Adani Ports & SEZ, erased the losses triggered by a critical Hindenburg report and are now trading above their January 2023 levels, when the report was published by the short-seller.
Source: MoneyControl
